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-(Figure: Production Possibility Frontier)Use Figure: Production Possibilities Frontier.This production possibility frontier is:
A)bowed out because of increasing opportunity costs.
B)bowed in because of increasing opportunity costs.
C)bowed out because of constant cost of cars and computers.
D)linear because of constant costs.

Question

Use the following to answer question:

-(Figure: Production Possibility Frontier)Use Figure: Production Possibilities Frontier.This production possibility frontier is:
A)bowed out because of increasing opportunity costs. 
B)bowed in because of increasing opportunity costs. 
C)bowed out because of constant cost of cars and computers. 
D)linear because of constant costs.

Quizplus · Accepted Answer

The production possibility frontier is bowed out, indicating increasing opportunity costs as the production of one good increases. This means that in order to produce more of one good, the production of the other good must be sacrificed at an increasing rate. Therefore, the best choice(s) would lie on the production possibility frontier itself, as producing beyond it would be inefficient and not feasible.

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