moving from left to right along the horizontal axis, the original increase in opportunity cost is fairly small, but

gradually increases. Thus, the slope of the PPF is relatively flat near the vertical-axis intercept. Conversely, as

we add more resources to healthcare, moving from bottom to top on the vertical axis, the original declines in

opportunity cost are fairly large, but again gradually diminish. Thus, the slope of the PPF is relatively steep

near the horizontal-axis intercept. In this way, the law of increasing opportunity cost produces the outward-

bending shape of the production possibilities frontier.

Productive Efficiency and Allocative Efficiency

The study of economics does not presume to tell a society what choice it should make along its production

possibilities frontier. In a market-oriented economy with a democratic government, the choice will involve a

mixture of decisions by individuals, firms, and government. However, economics can point out that some
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