In terms of the production possibilities diagram, the principle of increasing cost simply asserts that the frontier is
A)downward sloping.
B)upward sloping.
C)bowed inward.
D)bowed outward.
E)undefined, because no market will exist in this case.

Question

Quizplus · Accepted Answer

The principle of increasing cost asserts that as production of one good increases, the opportunity cost of producing an additional unit of this good increases as well. This is represented by a production possibilities frontier that is bowed outward, indicating that resources are not equally efficient in producing every good.

In Terms of the Production Possibilities Diagram, the Principle of Increasing