Consider a PPF for tapes and soda. If the opportunity cost of a tape increases as the quantity of tapes produced increases and also the opportunity cost of a soda increases as the quantity of soda produced increases, then the PPF between the two goods will be
A) a straight, downward-sloping line.
B) bowed outward.
C) a straight, upward-sloping line.
D) All of the above are possible and more information is needed to determine which answer is correct.

Question

Quizplus · Accepted Answer

If the opportunity cost of each good increases as the quantity of that good produced increases, then the PPF will be bowed outward (also known as concave). This is because in order to produce more of one good, increasing amounts of the other good must be given up, and the opportunity cost of each additional unit of the first good will be larger than the previous one.

Consider a PPF for Tapes and Soda