Can PPC be a straight line and when?Explain with an example
Answer provided by Hiba is correct. A PPC curve can be a straight line only if the marginal rate of transformation (MRT) is constant throughout the curve. A MRT can remain constant only if both the commodities are equally constant and the marginal utility derived from their production is also constant.
Let us take an example, suppose there are two goods, say, apple and oranges.
Here, we clearly see that to produce one more unit of an apple, we are sacrificing only one orange at each level. In this case, the MRT is constant, hence PPC will be a straight line.
Let us take an example, suppose there are two goods, say, apple and oranges.
apples | oranges |
1 | 4 |
2 | 3 |
3 | 2 |
4 | 1 |