Why is the production possibilities frontier (PPF) typically bowed-outward? Under what circumstances would the PPF be a straight line?

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Why is the production possibilities frontier (PPF) typically bowed-outward? Under what circumstances would the PPF be a straight line?


ANS:
The PPF is typically bowed-outward due to the law of increasing opportunity costs. As more of a product is produced, it becomes increasingly more difficult to find resources that are well-suited to producing that product. Therefore, the opportunity cost of producing more units grows and the PPF becomes steeper and steeper. The PPF is a straight line when the resources used to produce the two products are perfectly interchangeable, and thus the opportunity cost of producing more units is constant.

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