Explain why the shape of the production possibility frontier is bow shaped (assignment form)
The production possibility frontier (PPF) is bow-shaped due to the concept of opportunity cost.
The shape of the PPF represents the trade-off between producing two different goods or services. As an economy produces more of one good, it must allocate more resources towards that good, which means fewer resources are available to produce the other good. This results in a diminishing marginal rate of transformation between the two goods.
In other words, as an economy moves along the PPF and shifts resources from producing one good to producing more of the other, the opportunity cost of producing additional units of the second good increases. This causes the PPF to be bow-shaped, as the slope of the curve becomes steeper as you move further along the curve.
Overall, the bow shape of the PPF reflects the idea that resources are not infinitely adaptable and can only be used in a certain combination. This concept of opportunity cost and resource allocation is what gives the PPF its distinctive shape.