CBSE (Arts) Class 12CBSE
Share
Notifications

View all notifications

Giving Reason Comment on the Shape of Production Possibilities Curve Based on the Following Schedule: - CBSE (Arts) Class 12 - Economics

Login
Create free account


      Forgot password?

Question

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

Good X (units) Good Y (units)
0 8
1 6
2 4
3 2
4 0

Solution

Marginal opportunity cost:

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

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. With each additional unit of production of Good-X, the amount of Good-Y to be forgone is constant (2). So, because of constant opportunity cost, the production possibility curve (PPC) is a downward sloping straight line.

  Is there an error in this question or solution?

APPEARS IN

Solution Giving Reason Comment on the Shape of Production Possibilities Curve Based on the Following Schedule: Concept: Concepts of Production Possibility Frontier.
S
View in app×