'Decreasing opportunity cost' is represented by a ________ production possibility frontier.

Question

Quizplus · Accepted Answer

A bowed in production possibility frontier suggests decreasing opportunity cost. This means that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases, but at a decreasing rate. In other words, the marginal cost of production is decreasing. This is typically the case when resources are not perfectly adaptable to the production of both goods and there is a trade-off between the two.

'Decreasing Opportunity Cost' Is Represented by a ________ Production Possibility