If opportunity costs are increasing, then the production possibilities frontier
A)will be bowed out and have a positive slope.
B)will be positively sloped.
C)will be linear and have a negative slope.
D)will be bowed out and have a negative slope.
E)reflects the fact that available resources are equally useful in all production activities.

Question

Quizplus · Accepted Answer

When opportunity costs increase, it means that in order to produce more of one good, more and more units of the other good must be given up. This leads to a bowed-out (concave) production possibilities frontier with a negative slope. Choice A is incorrect because the slope is negative, not positive. Choice B is not specific enough about the shape of the curve. Choice C is incorrect because a linear production possibilities frontier assumes that resources are perfectly interchangeable between the two goods, which is not the case when opportunity costs are increasing. Choice E is also incorrect because increasing opportunity costs imply that resources are not equally useful in all production activities.

If Opportunity Costs Are Increasing, Then the Production Possibilities Frontier