What does a bowed-outward shape of the production possibilities curve represent?

The bowed-outward shape of the production possibilities curve (PPC) represents increasing opportunity costs as production shifts from one good to another. This occurs because resources are not perfectly adaptable for the production of all goods. As you increase the production of one good, you must allocate resources away from the production of another good, and the trade-off becomes greater as you continue to shift production.

The initial resources may be the most efficient for producing the first good, but as production of this good increases, less efficient resources are brought into play, leading to a higher opportunity cost for each additional unit produced. This reflects a real-world scenario where, for example, land more suited for agriculture might yield lower returns when used for industrial production. The curve illustrates that the more you try to produce of one good, the more of the other good you have to sacrifice, illustrating the principle of increasing opportunity costs effectively.