The production possibilities curve bows outward from the origin because:
A) opportunity costs decrease as the production of a good increases.
B) opportunity costs increase as the production of a good increases.
C) more production of one good results in more production of the other good.
D) resources are not of uniform quality.

Question

Quizplus · Accepted Answer

The production possibilities curve bows outward from the origin because opportunity costs increase as the production of a good increases. This means that as more of a good is produced, more and more units of the other good must be given up. This is due to the fact that resources are not perfectly adaptable to the production of both goods, and resources that are well-suited for production of one good become increasingly less suited as production of that good increases. Therefore, there is an increasing opportunity cost associated with producing more of any one good, causing the production possibilities curve to bow outwards.

The Production Possibilities Curve Bows Outward from the Origin Because