Figure 2-4
-In Figure 2-4,the bowed-out shape of the production possibilities curve indicates that

Question

Figure 2-4 
-In Figure 2-4,the bowed-out shape of the production possibilities curve indicates that

Quizplus · Accepted Answer

The bowed-out shape of the production possibilities curve indicates the concept of increasing opportunity cost, which means that to produce more of one good, society must give up increasing amounts of the other good. This suggests that some resources are relatively better at producing corn and others are better at producing cloth, leading to the bowed-out shape of the PPF. This indicates the presence of comparative advantage and specialization, which results in efficient production but an allocative inefficiency caused by the trade-off between producing one good over the other. Therefore, the best choice is D.

Figure 2-4 -In Figure 2-4,the Bowed-Out Shape of the Production Possibilities Curve