The Production Possibility Frontier (PPF) shown in Figure 1.1 has a concave shape (you can remember that

Question:

The Production Possibility Frontier (PPF) shown in Figure 1.1 has a "concave" shape (you can remember that this shape is called "concave" because it resembles part of the entrance to a cave). Explain in words why this shape is consistent with the concept of diminishing returns to increasing clothing production-that is, describe why the of producing more unit of clothing increases as more is produced. How would the PPF look if there were no diminishing returns to clothing production? How might the PPF look if clothing production experienced "increasing returns" because bigger weaving machines could be used as clothing production expands?
Opportunity Cost
Opportunity cost is the profit lost when one alternative is selected over another. The Opportunity Cost refers to the expected returns from the second best alternative use of resources that are foregone due to the scarcity of resources such as land,...