The production possibilities curve is bowed out from the origin because:
A)marginal benefits are equal.
B)marginal benefits decrease.
C)marginal benefits are unpredictable.
D)marginal benefits decrease and then increase in value.

Question

Quizplus · Accepted Answer

The production possibilities curve is bowed out from the origin because of increasing opportunity costs. As production of one good increases, the opportunity cost of producing additional units increases, making it less efficient to produce more of that good relative to the other good. This leads to a diminishing marginal benefit of producing more of that good and results in a bowed out shape of the production possibilities curve.

The Production Possibilities Curve Is Bowed Out from the Origin