CFA Practice Question

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CFA Practice Question

To graphically demonstrate the principle of increasing marginal opportunity cost, the production possibility curve must be ______.

A. straight
B. bowed out
C. bowed in
Correct Answer: B

When the production possibility curve is bowed out, as you increase production of one good, the slope of the curve becomes steeper. This implies that more and more of the other good must be given up. This follows the principle of increasing marginal opportunity cost.

User Contributed Comments 9

User Comment
vmt2002 Didn't know what bowed in/out meant, maybe could have used convex/concave?
azramirza Does bowed in means MC curve?
boddunah bowed in /bowed out did not help .
boddunah getting answer right with bow in / bow out has a binomial probability of 0.5..
added quants for fun.
bundy Bowed out means away from the horizontal axis...which is the Marginal cost curve...which follows the principle of increasing marginal opp cost
Bududeen bowed out means the curve is shaped away from the origin i.e.concave and and bowed in means shaped towards the origin ie convex. not to the horizontal nor the vertical axis.
schweitzdm Use google images for "bowed out concave" and "concave vs convex" for graphic examples.
fangluez Hate the wording of this question. Can we just stick to concave/convex?
Huricane74 Production Possibilities Curve
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