Question

True/False. Explain.  If a PPF is concave, then this reflects the principle of decreasing opportunity cost and can be explained by perfect transferences of resources.

Answer 1

False

The shape of a PPF is concave to the origin so as to represent increasing opportunity cost with increased output of a good. Mostly,the PPF(Production Possibility Frontier)curves are concave due to the inadaptability of the resources. The law of increasing opportunity cost expresses:as the production of one good rises, the opportunity cost of producing the good increases. Anyway, the country can have more weapons and food at the same time by these methods:

a) improvising its technological level,

b) economic growth,

C) trade with other countries.