A nation's production possibilities curve is bowed out from the origin because
A) resources are not generally equally efficient in producing every good.
B) opportunity costs of producing a good tend to fall as more of the good is produced.
C) resources are scarce.
D) wants are virtually unlimited.

Question

Quizplus · Accepted Answer

Resources are not generally equally efficient in producing every good, hence the nation's production possibilities curve is bowed out from the origin. This means that in order to produce more of one good, the country has to give up larger and larger amounts of the other good due to the imperfect substitutability of the resources used in their production. Therefore, the opportunity cost of producing each good increases as the nation moves along the production possibilities curve.

A Nation's Production Possibilities Curve Is Bowed Out from the Origin