Table 3-17
The following table contains some production possibilities for an economy for a given year.
-Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be
A)180.
B)200.
C)220
D)240.

Question

Table 3-17
The following table contains some production possibilities for an economy for a given year. 
-Refer to Table 3-17. If the production possibilities frontier is bowed outward, then "?" could be
A)180. 
B)200. 
C)220 
D)240.

Quizplus · Accepted Answer

The production possibilities frontier is bowed outward when the opportunity cost of producing one good in terms of another good decreases as more of the first good is produced. This means that the marginal rate of transformation (MRT) is decreasing. In Table 3-17, the MRT is decreasing from 2 to 1.5 to 1.25. This means that the opportunity cost of producing one unit of good X in terms of good Y decreases as more of good X is produced. This is consistent with a bowed-outward production possibilities frontier.

Table 3-17 The Following Table Contains Some Production Possibilities for an Economy