Science

Why is the PPC downward sloping?

By: Amit LeviUpdated: January 31, 2021

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The production possibilities frontier is downward sloping: producing more of one good requires producing less of others. The production of a good has an opportunity cost. As time passes, the production possibilities frontier shifts outward due to the accumulation of inputs and technological progress.

Besides, why do production possibilities curves slope down from left to right?

It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant.

Beside above, why PPC is concave to origin?

PPF is concave to origin because of the increasing marginal opportunity costs. That is more and more units of one commodity are sacrificed to gain an additional unit of another commodity. Due to this increasing marginal cost, PPF becomes more and more steep, thus the curve bends outwards and becomes concave to origin.

What is PPC slope?

Share. Answer. The slope of production possibility curve is marginal opportunity cost or marginal rate of transformation which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other.

Can a PPC line be straight?

In Economics, PPC stands for Production Possibility Curve. Yes, it can be a straight line. For this scenario, the PPC will be a straight line curve. Here, the opportunity cost is constant, in spite of the change in production of the two goods.

Related

What is PPC concave?

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.

What does a point below PPC indicate?

A point below PPC like F, depicts inefficiency or underutilisation of available resources. In other words, we can say that points that lie below the PPC such as point F are associated with underemployment of resources and inefficient utilisation of the available technology.

What is the shape of a PPC curve?

The PPC is usually a concave curve that starts at one axis and ends at the other, as illustrated. We will call this curve AD, using the letters at each end of the curve.

What are the properties of PPC?

The two main characteristics of PPC are:
  • Slopes downwards to the right: PPC slopes downwards from left to right.
  • Concave to the point of origin: It is because to produce each additional unit of commodity A, more and more units of commodity B will have to be sacrificed.

Why PPC is also called transformation curve?

The PPC also called transformation curve because in moving from one point to another on it, one good is 'transformed' into another not physically but by transferring resources from one use to the another. The PPC shift outward with the growth of the economy because of: The increase in the amount of capital.

What is production possibility curve Class 11?

In business, the Production Possibility Curve (PPC) is applied to evaluate the performance of a manufacturing system when two commodities are manufactured together. In the graph, the line sloping down also depicts the tradeoff between producing commodity A and commodity B.

What is the shape of PPC and why?

Shape of PPC has concave, convex and linear, it is depend on opportunity cost. The curve of PPC shows concave. This is due to increasing of opportunity cost. The opportunity cost of guns is calculated based on how much butter has been given up in order to produce more unit of guns by the country, and vice versa.

What is PPC explain with diagram?

In other words, production possibility curve can be defined as a graph that represents different combinations of quantities of two goods that can be produced by an economy under the condition of limited available resources. It is also known as production possibility frontier or transformation curve.

What does a rightward shift of PPC indicate?

what does rightward shift of production possibility curve indicate? Rightward shift in PPC indicates either advancement of technology or increase in the availability of the resources. increase in resources or improvement in technology.

Is the slope of a production possibilities curve positive?

The slope of the PPF represents the opportunity cost of moving from one combination of goods to another. The slope will always be NEGATIVE, because there is a trade off between the two goods, demonstrating the principles of scarcity and opportunity cost.

What are the 4 assumptions of the PPC?

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.

Can PPC be convex?

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.