A production possibilities frontier with a bowed-outward shape indicates
A)the possibility of inefficient production.
B)constant opportunity costs as more and more of one good is produced.
C)increasing opportunity costs as more and more of one good is produced.
D)decreasing opportunity costs as more and more of one good is produced.

Question

Quizplus · Accepted Answer

The bowed-outward shape of the production possibilities frontier indicates increasing opportunity costs as more and more of one good is produced. This means that the more resources are devoted to producing one good, the higher the opportunity cost becomes in terms of the output of the other good. This is because resources are not perfectly adaptable to producing both goods and are more efficient at producing one good than the other. As a result, as more and more of one good is produced, increasing amounts of the other good must be given up, resulting in a steeper slope of the PPF.

A Production Possibilities Frontier with a Bowed-Outward Shape Indicates