Explain why the shape of the production possibility frontier is bow shaped
The shape of the production possibility frontier (PPF) is bow-shaped because of the concept of opportunity cost.
As we move from producing one good to producing more of another, the opportunity cost of producing that additional unit increases. This is because resources in an economy are not perfectly suited to producing all goods equally efficiently. Some resources may be better suited for producing one good over another.
As a result, as an economy reallocates its resources from producing one good to producing another, the opportunity cost of producing the second good increases, leading to a concave shape of the PPF. This implies that to produce more of one good, the economy must give up increasing amounts of the other good. This is why the PPF is bow-shaped, representing the trade-offs and opportunity costs inherent in production decisions.