Q. A country produces two goods : A and B. Its production possibilities are shown in the following table . Calculate the values of MRT. Construct a PPF, with the help of given possibilities and discuss the shape of PPF. ​
Possibilities A B C D E F
Good A 0 1 2 3 4 5
Good B 100 95 85 70 50 20

dear student 

marginal rate of transformation = MCA /MCB
   Where,
MCA = money needed to produce another unit of A
MCB = rate of increase by cutting production of B 

TABLE
 
POSSIBILITIES A B MCA MCB MRT
A 0 100   -    -   -
B 1 95   1    5   5/1
C 2 85    1    10   10/1
D 3 70    1     15   15/1
E 4 50    1    20   20/1
F 5 25    1    25   25/1
  
CONSTRUCTION OF PPF :


SHAPE OF PPF :
The shape of PPF is commonly drawn as concave to the origin to represent increasing opportunity cost i.e. the loss of other alternative when one alternative is chosen, 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 PPF. 

Regards
 

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IMPROVE YOUR HANDWRITING
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Concave shape

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