What happens when opportunity costs are not constant during production?

When opportunity costs are not constant during production, the production possibilities frontier (PPF) will bow outward. This curvature indicates that as more of one good is produced, increasing amounts of the other good must be sacrificed, reflecting increasing opportunity costs.

This situation arises due to factors such as resources not being equally effective in the production of different goods. For instance, if an economy reallocates resources from one good to another, it may find that the most efficient resources for the first good are used first, and additional resources needed for the second good may be less effective, leading to a higher trade-off. As a result, the opportunity costs rise, which is represented by the outward bow of the PPF.

In contrast, a linear production frontier would suggest constant opportunity costs, which doesn't accurately depict real-world scenarios where resources are often specialized. Other options, such as the market becoming stagnant or productivity decreasing, do not directly relate to the concept of changing opportunity costs during production. Thus, the correct interpretation of non-constant opportunity costs is captured by the outward-bowing shape of the PPF.