What causes the production possibilities frontier to curve outward instead of forming a straight line?

The production possibilities frontier (PPF) curves outward primarily due to increasing opportunity cost. This concept reflects the reality that as an economy reallocates resources to produce more of one good, it typically has to give up increasingly larger amounts of the other good. In other words, the more resources (such as labor or capital) are devoted to the production of one good, the less efficient these resources become in producing the other good.

This increasing opportunity cost happens because different resources are not equally suited for producing all types of goods. For instance, if a nation primarily invests in producing grain, the resources may yield high output for that grain initially. However, as the nation starts to shift resources to produce cars, it might have to take away increasingly efficient resources from grain production that are not as effective at producing cars, leading to greater losses of grain for each additional car produced. Therefore, the result is a bowed-outward shape of the PPF.

In contrast, a straight line would imply constant opportunity costs, meaning that resources are equally efficient in producing both goods, which is rarely the case in real-world economies. With fixed opportunity costs, the trade-off between two goods remains the same, resulting in a linear PPF, which does not represent the typical scenario