Question

MCOM Part I SEM
1
Questions
Question 18)
Which of the given concepts can be used to explain why production possibility curve slope
downwards.



9
15
16
22
23
29
30
36
37
A)
BO
CO
DO
Scarcity
Sunk costs
abundance
Increasing marginal costs
43
44
50
Answ

Answer 1

Answer:

Increasing marginal opportunity costs explain why production possibilities frontiers slope downwards.

The production possibility frontier (PPF) will slope downward because to produce one more unit of one product, the producer has to sacrifice larger and larger units of other products. So, while increasing the production of one product, the sacrifice made by the producer keeps on rising. As a result, it can be stated that the PPF slopes downwards due to increasing marginal opportunity cost.

(b) Scarcity refers to a shortage of resources, but according to the standard definition of PPF, it uses productive resources efficiently.

(c) The law of demand states an inverse association between the quantity demanded of a product with its price level.

(d) Marginal analysis measures the marginal benefit and marginal cost associated with a given project or investment.