Why is the production possibilities frontier bowed out for an entire economy?

The production possibilities frontier (PPF) is typically bowed outwards because it reflects the principle of increasing opportunity costs. This principle arises from the fact that not all resources are equally efficient in producing every type of good or service. Some resources are better suited for the production of specific goods than others, leading to inefficiencies when those resources are reallocated.

As an economy tries to increase the production of one good, it must shift resources from the production of another good, which can be less efficient due to the differing suitability of resources. For example, if an economy is producing both cars and computers, and it decides to produce more cars, it might need to reallocate workers and materials originally suited for computer production. Since these resources may not be as effective when transitioned to car production, the economy faces increased costs in terms of the quantity of computers forgone. Hence, the bowed shape of the PPF represents this increasing cost as more and more of one good is produced at the expense of another.

This explanation clarifies the fundamental reason for the bowing of the PPF, demonstrating how resource allocation and efficiency play a crucial role in economic production capabilities.