A country's production possibilities curve is concave to the origin (i.e. ,bowed out from the origin)because
A) of the principle of scarcity.
B) the production of one good is expanded by first employing those resources with an absolute advantage.
C) the production of one good is expanded by first employing those resources with the lowest opportunity cost.
D) there is a trade off that requires a decrease in the production of one good in order to increase the production of the other good.
E) of the principle of absolute advantagE.

Question

Quizplus · Accepted Answer

The concave shape of the production possibilities curve is due to the law of increasing opportunity cost. As an economy produces more and more of one good, the opportunity cost of producing that good increases because resources that are best suited for producing the other good are being diverted to produce more of the first good. Therefore, in order to produce more of one good, the economy must give up increasingly larger amounts of the other good. This results in a concave shape of the production possibilities curve. Choice C correctly states that the production of one good is expanded by first employing those resources with the lowest opportunity cost.

A Country's Production Possibilities Curve Is Concave to the Origin