Final answer:
The opportunity cost of producing each additional bike in Armenia increases as more bikes are produced and fewer scooters, due to the law of increasing opportunity cost, which is reflected in the concave, outward-bending shape of the country's PPF.
Step-by-step explanation:
The shape of Armenia's production possibilities frontier (PPF) should reflect the fact that as Armenia produces more bikes and fewer scooters, the opportunity cost of producing each additional bike increases. This is due to the law of increasing opportunity cost, which states that as production of one good increases, the opportunity cost of producing additional units of that good will also increase, because resources are not perfectly adaptable for the production of all goods.
This means that the more Armenia focuses on bike production over scooter production, the more it has to give up in terms of scooters it could have produced with those resources. This concept produces an outward-bending shape of the PPF, indicating that the trade-offs become greater as one moves further along the curve.
In economics, this is shown by a concave PPF that becomes steeper as more of one good is produced, which reflects the increasing amounts of the other good that must be given up. Therefore, as Armenia moves towards producing more bikes, the PPF reflects larger sacrifices of scooter production, illustrating the productive efficiency and allocative efficiency in economic decisions.