PPC's bowed shape shows increasing opportunity costs

Steps:

• Recall PPC illustrates maximum output combinations of two goods with fixed resources and technology.
• Note typical PPC bows outward (concave to origin), unlike a straight line.
• Understand straight line implies constant opportunity cost; bowed shape means rising cost as production shifts.
• Conclude shape reflects changing (increasing) opportunity costs from resource specialization.

Why B is correct:

• Law of increasing opportunity costs states that as more of one good is produced, resources less suited to it are used, raising the cost of forgoing the other good.

Why the others are wrong:

• A: Free trade affects trade patterns, not PPC shape.
• C: Limited resources explain PPC's existence and boundary, not its curvature.
• D: Unemployment shifts production inside PPC, not altering its curve.

Final answer: B