Production possibilities curves for large economies generally have an outward bow shape because:
A) specialization gives some producers a comparative advantage.
B) opportunity costs tend to decrease with increases in production.
C) opportunity costs tend to increase with increases in production.
D) as more resources are used to produce the same good, those resources become less and less expensive.

Question

Quizplus · Accepted Answer

Production possibilities curves for large economies generally have an outward bow shape because opportunity costs tend to increase with increases in production. This means that as an economy produces more of one good, the opportunity cost of producing additional units of that good increases, resulting in a bowed-out shape of the production possibilities curve. This is due to the fact that resources are not perfectly adaptable to the production of all goods, so as more resources are allocated to one specific good, the opportunity cost of using those resources for producing other goods increases.

Production Possibilities Curves for Large Economies Generally Have an Outward