Why is the PPF concave?
Understand the Problem
The question is asking about the shape of the Production Possibility Frontier (PPF) and why it is typically represented as concave. This relates to the economic principle of increasing opportunity costs, which means that as production of one good increases, more and more of the other good must be sacrificed, leading to a concave shape.
Answer
Increasing marginal opportunity costs.
The final answer is because of increasing marginal opportunity costs.
Answer for screen readers
The final answer is because of increasing marginal opportunity costs.
More Information
The concavity of the PPF illustrates the economic principle that resources are not equally efficient in the production of all goods. Therefore, reallocating resources from one good to another increases the opportunity cost, making the curve concave.
Tips
A common mistake is to assume that the shape of the PPF is due to constant opportunity costs, which would make it a straight line instead.
Sources
- Why is the production possibilites curve concave? Explain. - BYJU'S - byjus.com
- Production–possibility frontier - Wikipedia - en.wikipedia.org
- Why is the production possibility curve concave? - Quora - quora.com
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