Is production possibility curve always concave?

Answers. Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost.

In which situation can ppc be straight line?

Your Answer :- PPC can be a straight line only when MRT will be constant. If both the commodities are constant, then the MRT will be also constant. In these Lines, PPC stand for Production Possibility Curve.

Is production possibility curve convex or concave?

The production possibility curve is convex outward from the origin because some of the economy’s resources are better able to produce good X than good Y while other resources in the economy are better able to produce good Y than good X.

How many types of PPC curves are there?

There are 3 types of production possibility curve which are straight-line sloping down, concave and convex curve. The first type of curve has a constant negative gradient or constant ratio which also means that as one item/good decreases by one, the other item/good will increase by one, and it will always be constant.

Why PPF curve is concave in shape?

The shape of a PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good. Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the PPF.

Why does the production possibilities curve have a concave shape?

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.

Why PPC is not straight line?

Its always drawn as a curve and not a straight line because there a cost involved in making a choice i.e when the quantity of one good produced is higher and the quantity of the other is low. This is known as opportunity cost.

In which situation PPF shifts towards right?

1- PPF shifts towards the right when there is a fully efficient use of resources. 2- When all resources are not equally efficient in the production of both goods the there is the possibility of the Production Possibility Frontier to be a straight line. 3- Available Resources are fully and efficiently utilized.

Why PPC Cannot be convex to the origin?

Answer: Therefore the PPC curve can be convex to the origin when the opportunity cost decreases. This can happen only when less and less units are forgone of first commodity for the introduction of additional unit of another commodity. This will lead the Production Possibility Curve to be convex to origin.

Why is PPC downward sloping and concave to the origin?

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 not assumption of PPC?

D. D. The four key assumptions underlying production possibilities analysis are: (1) resources are used to produce one or both of only two goods, (2) the quantities of the resources do not change, (3) technology and production techniques do not change, and (4) resources are used in a technically efficient way.