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If a firm has increasing returns to scope for producing two goods, then the production possibilities...

If a firm has increasing returns to scope for producing two goods, then the production possibilities frontier __________

a. bows away from the origin

b. is linear

c. is maximized

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Answer #1

Ans:-a) bows away from the origin.

Explanation:-Production possibility curve is a concave shape and bowed away because of increasing opportunity cost.The production possibility curve is bowed away from the origin due to law of increasing opportunity cost.The production possibility curve sometimes called production possibility frontier.The production possibility frontier is bowed away from/concave to origin because of inorder to increase the production of one good in more unit,some unit of other goods have to be reduced as the resources of the firm are limited and are not equally sufficient for the production of both goods in more unit simultanaeously

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