Economy produces 2 goods X and Y.what pattern in the table gives rise to the concave shape of ppf .

X =0 ,1,2,3,4,5


I was not able to show it as a table . . so i kept comma's in between.

PPC is concave to origin. This is because of the increasing opportunity cost i.e. in accordance with the law of increasing opportunity cost.
Production possibilities X Y
A 0 100
B 1 95
C 2 85
D 3 70
E 4 50
F 5 25
Point A, shows that if all the resources are utilised in the production of the Y,  then 100 units of consumer goods can be produced with zero units of X. As we move downwards along the PPC from left to right (i.e. from A to E), we observe that in order to produce more units of X, the economy must sacrifice some amount of Y. For example, movement from point B to point C implies that the economy is diverting resources from the production of Y to the production of X. In order to produce one additional unit of X, the economy needs to sacrifice ten units of Y. Thus, the opportunity cost of producing one additional unit of X is ten units of Y.

  • 0
What are you looking for?