The bowed- outward shape of a PPF
A) reflects the unequal application of technology in production.
B) is due to the existence of increasing opportunity cost.
C) is due to capital accumulation.
D) illustrates the fact that no opportunity cost is incurred for increasing the production of the good measured on the horizontal axis but it is incurred to increase production of the good measured along the vertical axis.

Question

Quizplus · Accepted Answer

The bowed-outward shape of a PPF is due to the existence of increasing opportunity cost. As we increase the production of one good, we have to give up more and more units of the other good. This reflects that resources are not equally efficient at producing all goods and as we move along the PPF, we have to use resources that are less and less suited to the production of the good we are trying to increase. Hence, the opportunity cost of producing one good increases as we produce more of it, resulting in the bowed-outward shape of the PPF.

The Bowed- Outward Shape of a PPF