Question

Why is the shape of the production possibilities frontier often curved instead of straight.

Answer 1

The Shape of the opportunity cost curve is curved instead of a straight line because of an increasing opportunity cost. That means if we are making more and more of a single product we have to give up more and more of the other product.

For example an economy can make 10 robots and grow 100 cotton at a same time. Both the products use different resources to be produced. One takes land and other takes capital. if we want to make only robots after consuming all the capital available we have to use other resources that is land or we have to sacrifice some of the cotton and use that resources in making robots. As we go on increasing more and more robot productions we will need all the resources, which may not be fit to make robots.So, we will need all of them.

Hence, the number of robots will increase slowly but the number of cotton grown will fall sharply giving that steep slope to the PPF curve. For having a straight line as PPF we need to have perfect substitution of labor which is impossible.