In general the shape of the production possibilities frontier is bowed out, not
ID: 1128518 • Letter: I
Question
In general the shape of the production possibilities frontier is bowed out, not a straight line. Why? A. The shape of the PPF changes as the demand for each good changes. B. In general, the factors of production in the economy are not equally capable of producing each type of good. C. The PPF is only a straight line when the monetary cost of producing each good is the same. D. The graph bows out because it is generally better to produce a combination of different goods rather than focus on producing only one type of good.
Explanation / Answer
Solution: In general, the factors of production in the economy are not equally capable of producing each type of good.
Explanation: The bow-out shape occurs when economic resources of a nation are not perfectly adaptable to the production of each type of goods and, therefore, the opportunity cost of producing a good will rise