Moe divides his time between studying Physics and studying Economics. He has discovered that he can earn grades as shown on this production possibilities curve. Refer to the figure above. Moe's PPC is bowed out because:
A) he is better at physics than at economics.
B) his studying is subject to the principle of increasing opportunity costs.
C) he is better at economics than at physics.
D) he has failed to take advantage of his comparative advantage.

Question

Moe divides his time between studying Physics and studying Economics. He has discovered that he can earn grades as shown on this production possibilities curve.  Refer to the figure above. Moe's PPC is bowed out because:
A) he is better at physics than at economics. 
B) his studying is subject to the principle of increasing opportunity costs. 
C) he is better at economics than at physics. 
D) he has failed to take advantage of his comparative advantage.

Quizplus · Accepted Answer

Moe's PPC is bowed out because of the principle of increasing opportunity costs. This means that to produce more of one good, Moe must give up increasingly larger amounts of the other good. As he devotes more time to studying Physics, he becomes less proficient at studying Economics and thus, the opportunity cost of studying Physics in terms of Economics increases. This results in the PPC being bowed out.

Moe Divides His Time Between Studying Physics and Studying Economics