Opportunity Cost on Production Possibility Frontier

Steps:

• Identify the production possibility frontier (PPF) as a curve showing maximum combinations of two goods.
• Locate points X and Y on the PPF to represent a trade-off in production.
• Check for movement along a bowed-out (concave) curve, indicating increasing opportunity cost.
• Select the diagram matching this movement without shifts or inefficiencies.

Why C is correct:

• Option C shows movement from X to Y along a concave PPF, where the increasing slope illustrates rising opportunity cost per the law of increasing costs.

Why the others are wrong:

• A: Displays a straight-line PPF, indicating constant opportunity cost, not increasing trade-off.
• B: Features points inside the PPF, showing inefficiency or unemployment, not a production trade-off.
• D: Illustrates an outward PPF shift, representing growth, not internal opportunity cost movement.

Final answer: C