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c) The PPF is bowed outward due to the law of increasing opportunity costs. Imagine you are producing at point A in the graph of part a). There you produce only grapes using all of your land. Now you want to consider raising 200 llamas (which means moving to point B). To
Alternatively, when the PPF shifts inwards it indicates that the economy is shrinking as a result of a decline in its most efficient allocation of resources and optimal production capability. A shrinking economy could be a result of a decrease in supplies or a deficiency in technology.