Answer to Question #63455 in Economics for Vanessa

Question

Why does a production possibilities curve have a bowed-out concave shape?

Answer 1

The production possibilities curve (PPC) has a bowed-out concave shape because of the law of increasing opportunity costs. As an economy devotes more of its resources to one kind of product, it becomes less efficient. That's why the PPC is flatter at its end points and more curved in the middle.