The production possibilities frontier has a bowed-out shape because the quantity of guns the economy must give up in order to produce more butter the more butter is produced. In other words, the opportunity cost of butter with increased production.

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Business

Lee Klein

25 July, 15:27

The production possibilities frontier has a bowed-out shape because the quantity of guns the economy must give up in order to produce more butter the more butter is produced. In other words, the opportunity cost of butter with increased production.

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Justin Shepherd · Answer 1

Increases

Explanation:

This is the concept of marginal productivity. If a country wants to produce one good they must shift the resources from one production centre to another. Similarly, to produce more butter a country must sacrifice more of a good to produce more butter. This shows that the opportunity cost of producing butter increases with increased production.