The conversation between human and AI assistant.
Under what circumstances would the production possible curve bowed in towards the origin?
Can you give me an example of a situation that could result in increasing opportunity cost?
Sure! Let's take the example of a farmer who has a farm of a fixed size. Initially, the farmer might allocate all his resources towards producing wheat, resulting in a high yield per acre of land. However, as the farmer starts planting more wheat, he might have to use land that is not as fertile, leading to a decrease in yield. In contrast, if the farmer allocates some of his resources towards producing potatoes, he may find that the yield per acre is still high, even if it's not as high as producing wheat on the most fertile land. As the farmer continues to allocate more and more resources towards potatoes, he may have to use land that is progressively less and less fertile, leading to a rising opportunity cost of producing potatoes in terms of forgone wheat output. This would result in a bowed-out production possibility curve, with the curve bending towards the origin.