The production possibilities frontier in Figure 3-1, using a move from point B to point D as an example, shows
A) a constant slope.
B) the principle of comparative advantage.
C) the principle of increasing costs.
D) an inefficient allocation of resources.

Question

Quizplus · Accepted Answer

Moving from point B to point D on the production possibilities frontier shows the principle of increasing costs, meaning that as more of one good is produced, the opportunity cost of producing the other good increases. This is indicated by the bowed-out shape of the production possibilities frontier.

The Production Possibilities Frontier in Figure 3-1, Using a Move