A bowed out production possibility frontier shows that the
A) opportunity cost of a good is constant as more of the good is produced.
B) opportunity cost of a good decreases as more of the good is produced.
C) opportunity cost of a good increases as more of the good is produced.
D) opportunity cost relationship is linear.
E) opportunity cost of producing another good is negative.

Question

Quizplus · Accepted Answer

A bowed out production possibility frontier indicates that there are increasing opportunity costs as more of a good is produced. This means that to produce more of one good, more and more units of the other good must be given up. As a result, the slope of the PPF becomes steeper as one moves along it, indicating increasing opportunity costs.

A Bowed Out Production Possibility Frontier Shows That the