An economy's production possibilities curve is concave to the origin because of the impact of:
A)the law of demand.
B)the law of supply.
C)the law of increasing opportunity cost.
D)the law of diminishing marginal utility.
E)the law of diminishing marginal returns.

Question

Quizplus · Accepted Answer

The production possibilities curve is concave to the origin because of the law of increasing opportunity cost. As an economy produces more of a good, the opportunity cost of producing each additional unit increases, as it requires giving up more and more of the other good. This leads to a bowed-out shape of the production possibilities curve.

An Economy's Production Possibilities Curve Is Concave to the Origin