Question

define ppc and state its properties.

Answer 1

HIIIII....

An indifference curve is the curve which represents all those combinations of two commodities which give the same level of satisfaction to a consumer. It slopes downward because an increase in the amount of Good X along the indifference curve is associated with a decrease in the amount of Good Y as the preferences are monotonic.

Properties of PPC:


i. PPC slopes downwards from left to right. It is because in a situation of fuller use of the given resources, production of both goods cannot be increased simultaneously. More of Good 1 can be produced only with less production of Good

ii. PPC is concave to the point of origin because to produce each additional unit of Good 1, more units of Good 2 will have to be sacrificed. Opportunity cost of producing every additional unit of Good 1 tends to increase in terms of the loss of production of Good 2. Production will act upon the law of increasing marginal opportunity cost.

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Answer 2

The two main characteristics of PPC are: Slopes downwards to the right: PPC slopes downwards from left to right. It is because in a situation of fuller utilisation of the given resources, production of both the goods cannot be increased simultaneously.