Question

Why is PPC bowed outward rather than flat?

Answer 1

Answer:

PPC curve is outward bowed or concave to origin due to 'Law of increasing opportunity cost'. The Marginal rate of transformation (MRT) i.e. rate of production of one commodity 'Y' is forgone to produce additional unit of other commodity 'X' is positive because of increasing opportunity cost with each unit of Y forgone.

Explanation:

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Answer 2

The PPC is bowed outward rather than flat because of the increase in the "opportunity cost". This happens because the production of one good is given up for producing an extra unit of the another good. Due to which the "opportunity cost" increases with each 'extra unit' because of giving up the production of one good.

Explanation:

• The PPC curve gives the various probabilities of production. It is shown in a graphical manner, that shows the "maximum amount' of production that the company can have for producing two goods with using all its 'resources' and 'inputs' effectively.
• The PPC is bowed outwards since there is an 'increasing impact' on the "opportunity costs' of the other product that is being produced since the production of one product is stopped. For increasing the production of one good it is necessary to stop the production of the other goods because of 'limited resources; that are available.
• The PPC can be a straight line when the "opportunity costs" do not change and remain in a 'constant mode' where it does not increase or decrease. There is no effect on the "opportunity cost" even when there is a change in quantities of goods that are being produced.

To know more about PPC

As Unemployment reduces (a) A point from inside the PPC shifts on the PPC. (b) PPC shifts rightwards (c) PPC shifts leftwards (d) A point outside PPC shifts on PPC

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