The following table contains some production possibilities for an economy for a given month.

If the production possibilities frontier is bowed outward,then "?" could be
A) 100.
B) 150.
C) 200.
D) 250.

Question

The following table contains some production possibilities for an economy for a given month.

If the production possibilities frontier is bowed outward,then "?" could be
A) 100. 
B) 150. 
C) 200. 
D) 250.

Quizplus · Accepted Answer

If the production possibilities frontier is bowed outward, it means that the economy experiences increasing opportunity costs. As we move from producing more of one good to producing more of the other, the opportunity cost of the second good increases. In other words, the more we produce of one good, the more resources we need to give up to produce additional units of the other good.

Looking at the table, we see that the opportunity cost of producing more Apples increases as we move from left to right. For example, to produce the first 100 Apples, we only need to give up 50 Bananas. However, to produce the next 100 Apples (i.e. from 100 to 200), we need to give up 100 Bananas. This means that producing 250 Apples would require giving up even more Bananas, making it the maximum possible level of production. Therefore, the answer is D) 250.

The Following Table Contains Some Production Possibilities for an Economy