Asked by Noelle Leipold on May 01, 2024
Verified
The bowed-outward shape of the production possibilities frontier can be explained by the fact that
A) all resources are scarce.
B) economic growth is always occurring.
C) the opportunity cost of one good in terms of the other depends on how much of each good the economy is producing.
D) the only way to get more of one good is to get less of the other.
Production Possibilities Frontier
A curve that illustrates the maximum feasible amount of two goods that can be produced with given resources and technology.
Opportunity Cost
The financial setback of forgoing the next highly regarded alternative when determining a course of action.
- Absorb the essence of opportunity cost and its implications for economic decision processes.
Verified Answer
SP
Shilvi PatelMay 03, 2024
Final Answer :
C
Explanation :
The bowed-outward shape of the production possibilities frontier (PPF) reflects increasing opportunity costs. As more of one good is produced, the economy must sacrifice increasingly larger amounts of the other good, due to the differing efficiency of resources in the production of each good. This principle explains why the PPF is not a straight line but rather curves outward.
Learning Objectives
- Absorb the essence of opportunity cost and its implications for economic decision processes.