The PPF measures farmland on the y-axis and suburbs on the x-axis. Why is the PPF bowed outward?
The PPF is bowed outward because ______________.
What does a bowed-out PPF tell us about the opportunity cost of building an additional suburb? Why does this feature of opportunity cost occur?
A bowed-out PPF shows that the opportunity cost of building an additional suburb increases as more suburbs are built. This occurs because initially the land used for suburbs is not prime agricultural land. But as the number of suburbs increases, the land used is more and more productive farmland, and the opportunity cost of building an additional suburb increases.
