Table 3-15
The following table contains some production possibilities for an economy for a given month.

-Refer to Table 3-15.If the production possibilities frontier is bowed outward,then "?" could be
A) 50.
B) 75.
C) 100.
D) 125.

Question

Table 3-15
The following table contains some production possibilities for an economy for a given month.
 
-Refer to Table 3-15.If the production possibilities frontier is bowed outward,then "?" could be
A) 50. 
B) 75. 
C) 100. 
D) 125.

Quizplus · Accepted Answer

If the production possibilities frontier is bowed outward, it means that the opportunity cost of producing one good increases as more of it is produced. This implies that the economy is not using its resources efficiently and there is room for improvement. The maximum production for both goods is at the point where the frontier is tangent to the highest attainable indifference curve. In this case, that point is at the intersection of the production possibility frontier and the point where 125 units are produced. Therefore, D is the best choice.

Table 3-15 The Following Table Contains Some Production Possibilities for an Economy