Why is the production possibility curve bowed out? Why is there an increasing opportunity cost of...

Why is the production possibility curve bowed out?
Why is there an increasing opportunity cost of a good as more of it is produced?
Explain why does an increase in supply lead to lower prices?

Expert Solution

1) The production possibility curve bowed out, or concave, in shape due to the law of increasing opportunity cost. The law of increasing opportunity cost states that when a business continues to increase production its opportunity cost raises thus the production possibility curve is bowed out

2) The law of increasing opportunity costs states when a business increase production of one product, then opportunity cost to produce an additional product will rise. It occurs because all resources are not created equal. Few resources are better than others for producing certain products (or services).

3) There is an inverse relationship between the prices and supply of goods and services when demand is unchanged. If there is an increase in supply for goods and services while demand remains constant the prices will likely to decrease to a higher equilibrium quantity of products and services and lower equilibrium prices

Rahul Sunny answered 1 year ago

Increasing opportunity cost along a bowed-out production possibilities frontier occurs because?

Explain the relationship between the bowed-out shape of the production possibilities frontier and the increasing opportunity...

Explain the relationship between the bowed-out shape of the production possibilities frontier and the increasing opportunity cost of a good as more of it is produced? (Minimum 150 words) (3 points) What is the difference between quantity demanded and demand? Explain the factors that change the demand. (Minimum 150 words) (5 points)

2. Draw an increasing opportunity cost Production Possibility Frontier and mark 1. The point that shows...

2. Draw an increasing opportunity cost Production Possibility Frontier and mark 1. The point that shows inefficient production 2. Efficient Production 3. Point of production that cannot be achieved. 3. In the following questions, draw the graph and answer in words. (5 points each) a) Draw a demand curve for pizza and show what happens when price of pizza falls. b) Assuming pizza to be a normal good, show what happens when income increases. c) If beer is a complementary...

Discuss how does a PPC (Production possibility curve) explain the concepts of tradeoffs (opportunity cost), attainable...

Discuss how does a PPC (Production possibility curve) explain the concepts of tradeoffs (opportunity cost), attainable and unattainable output combinations, and efficiency. What kinds of decisions would make a PPF expand over time? What kinds of decisions would make it contract over time?

1) An autarkic country has a production possibility curve with constant opportunity costs such that it...

1) An autarkic country has a production possibility curve with constant opportunity costs such that it can produce at most 210 units of silk, or at most 70 units of kerosene. Suppose this country is currently producing 56 units of kerosene and 42 units of silk, and decides instead to produce 69 units of silk; how much kerosene will it produce?___ 2) Consider the production possibility curves for England and Portugal. Each country can produce cloth or wine. England can...

Why is the PPF bowed outwards (instead of linear)? a) … because there is an increasing...

Why is the PPF bowed outwards (instead of linear)? a) … because there is an increasing marginal opportunity cost of producing both goods b) … because there is a decreasing marginal opportunity cost of producing both goods c) … because consumers prefer consumer goods to capital goods d) …because demand for capital goods is higher than demand for consumer goods

Discuss the following indicators of the production-possibility curve. Include diagrams. 1) Efficiency 2) Opportunity Costs 3)...

Discuss the following indicators of the production-possibility curve. Include diagrams. 1) Efficiency 2) Opportunity Costs 3) Marginal Rate of Transformation 4)Shape 5)Position

Question