The concavity or bowed-out shape of the production possibilities frontier is the result of
A)the law of downward-sloping demand.
B)the law of upward-sloping demand.
C)the principle of increasing cost.
D)complementarity in consumption.

Question

Quizplus · Accepted Answer

The principle of increasing cost states that as a society produces more and more of a particular good, the opportunity cost of producing an additional unit of that good increases. This is reflected in the concave shape of the production possibilities frontier, where the cost of producing one good increases as more of it is produced. Therefore, choice C is the correct answer.

The Concavity or Bowed-Out Shape of the Production Possibilities Frontier