The Main Reason Why a Production Possibilities Frontier Would Have

question 212

Multiple Choice

The main reason why a production possibilities frontier would have a concave shape is:

• A) because of decreasing opportunity costs
• B) because the rate at which one good can be substituted for another is fixed.
• C) because as a country specializes in one product, it must give up more of the other.
• D) because consumers face diminishing marginal returns in consumption.

---

Definitions:

Entry Barriers

Obstacles that prevent or hinder new competitors from easily entering an industry or area of business.

Competitive Price-Searcher

A market characteristic where firms actively seek to set prices competitively, often through differentiation, to attract customers.

Long-Run Equilibrium

A state in which all firms in a market are making just enough profit to stay in business, with no incentive for new firms to enter or existing firms to exit.

Price Taker

A market participant that accepts the market price as given and has no influence to alter the price of the good or service they buy or sell.