Contents
Why is a production possibilities curve downward sloping explain?
The downward sloping nature of the PPC is due to the law of increasing opportunity cost. According to this law, with the fuller utilisation of the given resources, in order to produce an additional unit of one good, some of the resources are to be withdrawn from the production of another good.
Why is the PPF curve downward sloping and concave to the origin?
PPF is concave to the origin which reflects increasing opportunity cost i.e. as one moves downward on the PPF, the amount of production of one good that needs to be sacrificed so as to increase the production of the other good.
Why production possibility curve is typically bowed downward using opportunity cost concept?
The production possibilities curve is bowed in shape because of the law of increasing opportunity cost, which explains the idea that the more units of a product are produced, the less capability the economy has of producing other products.
Why is production possibility curve concave?
The production possibility curve is concave to the point of origin because to produce each additional unit of Good X, more units of Good Y will have to be sacrificed than before. The opportunity cost of producing every additional unit of Good X tends to increase in terms of the loss of production of Good Y.
What is slope of production possibility curve?
The slope of the PPF indicates the opportunity cost of producing one good versus the other good, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.
How do you read a production possibilities curve?
The production possibility curve bows outward. The highest point on the curve is when you only produce one good, on the y-axis, and zero of the other, on the x-axis. On the chart, that is Point A, where the economy produces 140,000 apples and zero oranges.
Why is PPC concave 11?
PPC is concave to the origin because of increasing Marginal opportunity cost. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacriced since the resources are limited and are not equally efficient in the production of both the goods.
What is the slope of production possibility curve?
The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other.
Why does the production possibility curve slope downwards?
The feedback you provide will help us show you more relevant content in the future. PPC or the production possibility curve slopes downwards due to the negative relationship between the resources. To produce more of one good the production of the other good must be reduced and this happens due to scarcity of the resources.
Why is the PPC a downward sloping curve?
Why is the PPF curved and not straight?
It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant. Why is the PPF curved and not straight?
Why does the PPC of butter slope downwards?
PPC slopes downwards due to inverse relationship between the two goods. This can be understood better with an example. Consider the PPC between guns (War good) and butter (civil good). The producer will be able to produce more butter only when he curtails the production of guns.