Question

14. On a bowed production possibilities frontier, as you move down along the curve a. more of one good must be given up to receive one unit of the other good. b. the available production technology does not change. c. the opportunity cost increases. d. All of the above are correct.

Answer 1

The correct answer is option d.

Step-by-step explanation:

A production possibilities frontier shows the different combinations of two goods that can be produced using all the available resources and the level of technology. Since the resources are limited we cannot increase the production of both goods. To increase the production of one good we need to sacrifice or give up production of the other.

As we go on increasing the production of one good, the opportunity cost goes on increasing as well. Because of increasing opportunity cost, the shape of the frontier is bowed out and concave to the origin.

The level of technology remains the same on a production possibility frontier. If there is a change in technology the frontier will shift.