Refer to the accompanying figure. If this restaurant goes from producing 20 to 25 pizzas per hour, then which of the following statements is true?
A)It has to give up exactly 25 salads.
B)It has to give up more than 12.5 salads.
C)It has to give up exactly 12.5 salads.
D)It has to give up fewer than 12.5 salads.

Question

Refer to the accompanying figure. If this restaurant goes from producing 20 to 25 pizzas per hour, then which of the following statements is true? 
A)It has to give up exactly 25 salads. 
B)It has to give up more than 12.5 salads. 
C)It has to give up exactly 12.5 salads. 
D)It has to give up fewer than 12.5 salads.

Quizplus · Accepted Answer

The fact that the production possibilities curve is bow-shaped indicates increasing opportunity costs. Going from 20 to 30 pizzas per hour, the restaurant has to give up 25 salads. Since opportunity costs are increasing, it will give up fewer salads when it goes from 20 to 25 pizzas than when it goes from 25 to 30 pizzas. Thus, of the 25 salads the restaurant has to give up when it goes from 20 to 30 pizzas, fewer than half of them (that is, fewer than 12.5)will be given up when going from 20 to 25 pizzas.

Refer to the Accompanying Figure