Question

Explain why PPC falls left to right and concave to origin

Answer 1

Answer:

A production possibility curve(PPC) is a hypothetical representation. which represents the amount of two different goods that can be produced with the full use of given resources in an economy under technological conditions.

PPC Curve slopes downward from left to right because of the fact that in a combination if we produce more of one good with limited resources, the less we produce of the another good.

PPC is concave to the origin because of the increasing marginal opportunity cost. As we move down along the PPC, to produce each additional unit of one good, more and more units of other good needs to be sacrificed.That is, as we move down along the PPC,the marginal opportunity cost increases.This is called as the Law of increasing opportunity cost.