A Production Possibility Frontier (PPF) that bows outward indicates that the opportunity cost of producing more of one good increases as you produce more of that good. In simpler terms, as a country or business decides to produce more of one item, it must give up increasingly larger amounts of the other item.
This phenomenon is often due to the law of increasing opportunity costs, which suggests that resources are not perfectly adaptable for the production of different goods. For example, if a factory produces both cars and bikes, the workers and machines may not be equally effective at making both. As more bikes are produced, the factory may have to use workers who are less skilled at bike production, leading to inefficiencies and a greater sacrifice of car production.
In conclusion, a bowed outward PPF reflects the reality that shifting resources from one type of production to another can result in higher opportunity costs, emphasizing the trade-offs that producers face when making choices about output.