The bowed-out shape of the production possibilities frontier can be explained by the fact that

Question

Quizplus · Accepted Answer

The bowed-out shape of the production possibilities frontier implies that the opportunity cost of producing one good in terms of the other increases as an economy produces more of a particular good. This is because resources are not equally efficient in producing different goods, and some goods require more resources to produce than others. Therefore, the more an economy produces of a particular good, the more it must give up of another good, leading to the bowed-out shape of the production possibilities frontier. The other options are incorrect because scarcity is a given, but it does not explain the shape of the production possibilities frontier, economic growth is not always occurring, and tradeoffs are indeed important and considered in constructing the production possibilities frontier.

The Bowed-Out Shape of the Production Possibilities Frontier Can Be