When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a. increases as more of the good is produced. by. decreases as more of the good is produced. c. does not change as more of the good is produced. d. may increase, decrease, or not change as more of the good is produced.

Question

Jasmin Mann

Business

12 February, 05:48

When a production possibilities frontier is bowed outward, the opportunity cost of producing an additional unit of a good a. increases as more of the good is produced. by. decreases as more of the good is produced. c. does not change as more of the good is produced. d. may increase, decrease, or not change as more of the good is produced.

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Answers (1)

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Cason Solomon · Answer 1

The correct answer is option a.

Explanation:

A production possibility frontier is generally bowed outward or is concave to the origin. This shape of the frontier shows the increasing opportunity cost. Because of the scarcity of resources we need to sacrifice the production of one good to increase the production of others. As we go on increasing production, the opportunity cost goes on increasing with each additional unit of a good.

This is because the resources are specialized, they cannot be perfectly substituted for producing two goods. So as the production of a good increase, the opportunity cost increases as well.