The efficiency frontier has a convex shape because of
A) consumer surplus.
B) diminishing returns.
C) profitability.
D) differentiation strategy.

Question

Quizplus · Accepted Answer

The efficiency frontier shows all of the different positions that a firm can adopt with regard to adding value to the product (V) and low cost (C) assuming that its internal operations are configured efficiently to support a particular position. The efficiency frontier has a convex shape because of diminishing returns.

The Efficiency Frontier Has a Convex Shape Because of