Use the following to answer question(s):
Exhibit: Guns and Butter

-(Exhibit: Guns and Butter) This production possibilities curve is:
A) linear and because of the constant cost and
B) bowed in toward the origin because of increasing opportunity costs.
C) bowed in toward the origin because of constant cost of guns and butter.
D) bowed out from the origin because of increasing opportunity costs.

Question

Use the following to answer question(s): 
Exhibit: Guns and Butter
 
-(Exhibit: Guns and Butter) This production possibilities curve is:
A) linear and because of the constant cost and 
B) bowed in toward the origin because of increasing opportunity costs. 
C) bowed in toward the origin because of constant cost of guns and butter. 
D) bowed out from the origin because of increasing opportunity costs.

Quizplus · Accepted Answer

The curve is bowed out from the origin because of increasing opportunity costs. As we produce more of one good, we have to give up more and more of the other, resulting in an increasing opportunity cost.

Use the Following to Answer Question(s)