A bowed outward production possibilities curve occurs when
A) opportunity costs are constant.
B) resources are not scarce.
C) additional units of output of one good necessitate greater reductions in the other good.
D) there are surpluses in the goods being produced.

Question

Quizplus · Accepted Answer

A bowed outward production possibilities curve occurs when increasing the production of one good requires giving up more and more units of the other good. This means that the opportunity cost of producing one good increases as more of it is produced, leading to a bowed outward shape. Option A is incorrect because constant opportunity costs would result in a straight line PPC. Option B is also incorrect because scarcity is a fundamental economic problem that all economies face, so resources are always considered scarce. Option D is incorrect because surpluses are associated with excess supply and not PPCs.

A Bowed Outward Production Possibilities Curve Occurs When