Economics · Economy
Which of the following statements most accurately captures the underlying economic principle illustrated by a concave Production Possibility Frontier (PPF), and what implication does this have for resource allocation?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1It represents a linear trade-off between goods and services, thus supporting autarkic development strategies
- 2It shows decreasing marginal returns from producing capital goods, justifying complete specialization
- 3It reflects increasing opportunity cost, indicating that resources are not equally efficient in all uses, necessitating careful prioritization in planning✓
- 4It implies constant opportunity cost due to perfect factor mobility between goods
Correct answer
It reflects increasing opportunity cost, indicating that resources are not equally efficient in all uses, necessitating careful prioritization in planning
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