The Reason That the Production Possibilities Frontier Is Usually a Bow-Shaped

question 170

Multiple Choice

The reason that the production possibilities frontier is usually a bow-shaped curve instead of a straight line is that

• A)it makes it easier to illustrate the concepts of scarcity and prices with a bow-shaped curve than it is with a straight line
• B)early economists began drawing them in this way and the convention has continued throughout the years
• C)output eventually reaches a maximum and then declines
• D)resources are not perfectly adaptable to the production of all goods
• E)the frontier will shift outward over time

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Definitions:

Unit Product Cost

The total cost incurred to produce a single unit of a product, including materials, labor, and overhead.

Fixed Production Costs

Costs that do not change with the level of production, such as rent, salaries, and insurance.

Financial Advantage

The benefit gained from making a particular financial decision or investment, often quantified by profits or savings.

Fixed Manufacturing Expenses

Costs that do not vary with production volume, such as rent, salary of permanent staff, and equipment depreciation.