A production possibilities curve that is bowed out represents the case of
A)constant costs.
B)increasing costs.
C)decreasing costs.
D)external costs.

Question

Quizplus · Accepted Answer

A production possibilities curve that is bowed out (concave) represents increasing costs of production. This means that as more of one good is produced, the opportunity cost of producing an additional unit of that good increases. The reason for increasing costs may be due to the limited availability of resources, such that producing more of one good requires giving up increasingly larger amounts of the other good.

A Production Possibilities Curve That Is Bowed Out Represents the Case