Question

A nation's production possibilities curve is bowed out from the origin because: A. resources are not equally efficient in producing every good. B. the originator of the idea drew it this way and modern economists follow this convention. C. resources are scarce. D. wants are virtually unlimited.

Answer 1

Answer:

The correct answer is option A.

Explanation:

A production possibility curve shows the different bundles of maximum possible two goods that can be produced using the given resources. The production possibility curve is concave to the origin.  

This shape of the curve is because of opportunity cost. We know that to increase the production of one commodity we need to sacrifice production of its alternative.  

The resources can not be perfectly substituted and the opportunity cost goes on increasing with the increase in output, that's why the production possibility curve is bowed out or concave to the origin.