Question

Giving reason comment on the production possibilities curve based on the following schedule:

Good X (units)	Good Y (units)
0	20
1	18
2	14
3	8
4	0

Answer 1

Marginal opportunity cost is as follows:

Good X (Units)	Good Y (Units)	MOC = `"ΔY"/"ΔX"`
0	20	-
1	18	2/1 = 2
2	14	4/1 = 4
3	8	6/1 = 6
4	0	8/1 = 8

The above schedule clearly states that the production of Good-X increases from Unit 1 to
Unit 2, and correspondingly, the units of Good-Y forgone is 2. While the production of Good-X increases from Unit 2 to Unit 3, 4 units of Good Y are forgone. With each additional unit of production of Good-X, the amount of Good-Y to be forgone increases. So, by increasing opportunity cost, the production possibility curve (PPC) is concave to the origin.