Question

The PPF between goods X and Y will be a downward-sloping:________.a. straight line if constant opportunity costs exist.b. straight line if decreasing opportunity costs exist.c. curve that is bowed outward if decreasing opportunity costs exist.d. curve that is bowed outward if constant opportunity costs exist.

Answer 1

Answer:

A

The Production possibilities frontiers is a curve that shows the various combination of two goods a company can produce when all its resources are fully utilised.  The PPF is bowed outward if increasing opportunity costs exist.

As more quantities of good X is produced, there would be fewer resources available to produce good Y. As a result, less of good Y would be produced. So, the opportunity cost of producing a good increase as more and more of that good is produced.