Exhibit 3-5
-Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

Question

​Exhibit 3-5 
-Refer to Exhibit 3-5. If the economy depicted in the diagram above chooses to shift more of its resources into clothing, it will have to give up:

Quizplus · Accepted Answer

This is because the economy depicted in the diagram has an inward-sloping PPF, which indicates that there are diminishing marginal returns to producing more of either output. As more resources are shifted into clothing, they are taken away from food production, which means that each additional unit of clothing produced requires more and more resources (including labor, capital, etc.) that are better suited for producing food. Therefore, the opportunity cost of producing additional units of clothing increases as we move from left to right along the PPF, which means that the economy has to give up larger and larger amounts of food per unit of added clothing.

​Exhibit 3-5 -Refer to Exhibit 3-5. If the Economy Depicted in the Depicted

Exhibit 3-5 -Refer to Exhibit 3-5. If the Economy Depicted in the Depicted