If the production possibilities curve is smoothly bowed out (concave to the origin),the underlying economy is probably a
A) single-person model.
B) two-person model.
C) half-person model.
D) three-person model.
E) multi-person model.

Question

Quizplus · Accepted Answer

A production possibilities curve that is smoothly bowed out (concave to the origin) indicates that the marginal opportunity cost of producing one good increases as more of that good is produced. This is typical in a multi-person model where resources are not equally suited to the production of each good and there are diminishing marginal returns. In a single-person model, the curve would be linear, while in a two-person model, it would be less bowed out. Half-person and three-person models are not commonly used in economics.

If the Production Possibilities Curve Is Smoothly Bowed Out (Concave