Why is a production possibilities frontier typically drawn as a curve, rather than a straight line?
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Step 1: The production possibilities frontier (PPF) is typically drawn as a curve rather than a straight line because of two main reasons. Show more…
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Why is the shape of the production possibilities frontier (PPF) often curved instead of straight? The productive efficiency of an economy decreases as it moves from left to right along the PPF. Typically, some resources are better suited for producing one good than another, which means that there are diminishing returns when moving such resources away from producing what they are best suited for. Because the production possibilities frontier is based on the productive capabilities of a nation overall, rather than the productive capacity of an individual. To take a potential sunk cost into account, the PPF is curved to distribute the burden of the sunk cost based on allocative efficiency.
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