Table 2-5
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is
A)bowed outward indicating increasing opportunity costs.
B)bowed outward indicating decreasing opportunity costs.
C)a straight line indicating constant opportunity costs.
D)bowed inward indicating increasing opportunity costs.

Question

Table 2-5 
-Refer to Table 2-5. Table 2-5 shows one set of production possibilities. Based on the values in the table, the production possibilities frontier is
A)bowed outward indicating increasing opportunity costs. 
B)bowed outward indicating decreasing opportunity costs. 
C)a straight line indicating constant opportunity costs. 
D)bowed inward indicating increasing opportunity costs.

Quizplus · Accepted Answer

The production possibilities are not linear, indicating that resources are not perfectly interchangeable between the two goods. In addition, the opportunity cost of producing more of one good increases as we produce more of it, indicating that resources are specialized for each good. Both of these characteristics suggest that the production possibilities frontier is bowed outward, indicating increasing opportunity costs.

Table 2-5 -Refer to Table 2-5. Table 2-5 Shows One Set of One