A nation's production possibilities curve is bowed out from the origin because:
A) resources are not generally equally efficient in producing every good.
B) the originator of the idea drew it this way and modern economists follow this convention.
C) resources are scarce.
D) wants are virtually unlimited.

Question

Quizplus · Accepted Answer

The production possibilities curve (PPC) is bowed out from the origin because resources are not equally efficient in producing every good. This means that as we produce more of one good, we have to give up increasingly larger amounts of the other good, as the resources used in producing the first good are better suited for that particular production. This is known as the law of increasing opportunity cost. Therefore, the PPC will show a bowed-out shape to represent this increasing opportunity cost. The other choices (B, C, D) are not the main reason for the bowed-out shape of the PPC.

A Nation's Production Possibilities Curve Is Bowed Out from the Origin