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 concave. This involves understanding concepts related to opportunity cost and the trade-offs in production.
Answer
Increasing marginal opportunity costs
The final answer is that the PPF is concave due to increasing marginal opportunity costs.
Answer for screen readers
The final answer is that the PPF is concave due to increasing marginal opportunity costs.
More Information
The concave shape represents the idea that resources are not equally efficient in the production of all goods. The opportunity cost increases as one moves along the curve because reallocating resources often means using less efficient resources for production.
Tips
A common error is thinking the curve is straight, which would imply constant opportunity costs.
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? - homework.study.com
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