The production possibilities curve bows outward because
A) opportunity costs are decreasing as the production of a good increases.
B) opportunity costs are increasing as the production of a good increases.
C) opportunity costs are fixed as the production of a good increases.
D) resources are of uniform quality.

Question

Quizplus · Accepted Answer

The production possibilities curve bows outward due to the law of increasing opportunity costs, which states that as production of one good increases, the opportunity cost of producing an additional unit of that good increases. This is because resources are not perfectly adaptable to the production of all goods, so more and more specialized resources are used less efficiently as production shifts towards one good.

The Production Possibilities Curve Bows Outward Because