Question

A production possibilities frontier (Select all that apply)

A) illustrates the limits to the quantities of goods and services a society can produce

B) is downward-sloping from right to left

C) is bowed out from the origin because of diminishing marginal returns

D)is bowed out from the origin because of increasing marginal returns

Answer 1

Answer. (A) and (C) are correct options.

Explanation: A PPF shows different combinations of two goods an economy can produce by utilising all its resources. It is bowed out because of increasing opportunity costs, which can be otherwise read as diminishing marginal returns. This means that as more of one good is produced, then more of the other good has to be sacrificed so as to get the resources for production. This curve is downward sloping from left to right, not right to left.

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