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Answer :
Final answer:
When a product transformation curve is bowed inward, it indicates diseconomies of scale, meaning that the cost per unit of production increases as the firm increases its production. This can be caused by inefficiencies in the production process. On the other hand, a bowed outward curve indicates economies of scale, where the cost per unit of production decreases as the firm increases its production.
Explanation:
When a product transformation curve for a firm is bowed inward, it indicates diseconomies of scale. This means that as the firm increases its production, the cost per unit of production increases. This can be caused by inefficiencies, such as bottlenecks or problems with coordination.
For example, if a firm hires more workers without providing adequate training or resources, the increase in production may not be as efficient as expected, leading to higher costs per unit.
In contrast, when a product transformation curve is bowed outward, it indicates economies of scale. This means that as the firm increases its production, the cost per unit of production decreases. This can happen due to factors such as specialization, division of labor, or utilization of economies of scope.
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