Some resources are better suited to produce certain goods than other resources. This fact leads to
A) a linear production possibilities curve.
B) inefficiency in the economy.
C) the law of increasing additional cost.
D) increases in technology.

Question

Quizplus · Accepted Answer

When some resources are better suited to produce certain goods, the opportunity cost of producing those goods with alternative resources increases. This results in the law of increasing additional cost, where producing additional units of a good requires giving up increasing amounts of another good. This leads to a curved production possibilities frontier and inefficiency in the economy, as resources are not being allocated in the most efficient manner. Increases in technology can mitigate some of these inefficiencies, but they do not negate the fundamental trade-offs imposed by the different productive capabilities of resources.

Some Resources Are Better Suited to Produce Certain Goods Than