Which of the following best explains why the production possibilities frontier (PPF) is typically bowed outward in a graph?

• A. The PPF is bowed outward because of decreasing opportunity costs as more of one good is produced.
• B. All resources are perfectly adaptable to producing any good, resulting in constant opportunity costs.
• C. The shape of the PPF is determined by government regulations rather than resource allocation.
• D. Resources are not equally efficient in producing all goods, leading to increasing opportunity costs.

Answer: (D)

Verified step by step guidance

1. Understand that the Production Possibilities Frontier (PPF) represents the maximum combinations of two goods that an economy can produce given its resources and technology.
2. Recognize that the shape of the PPF depends on how resources are allocated and how efficiently they can be used to produce different goods.
3. Recall that if resources were perfectly adaptable to producing both goods, the opportunity cost would be constant, and the PPF would be a straight line.
4. Identify that the PPF is typically bowed outward because resources are not equally efficient in producing all goods, which means that as you produce more of one good, you have to give up increasingly larger amounts of the other good—this is called increasing opportunity cost.
5. Conclude that the outward bow shape reflects increasing opportunity costs due to the varying suitability of resources for producing different goods.