Question

Giving reason, comment on the shape of Production Possibilities curve based on the following schedule:

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

Answer 1

\[ \text{MOC}=\frac{\text{Loss of Good Y}}{\text{Gain of Good X}} \]

Good X (Units)	Good Y (Units)	MOC
0	8	–
1	6	2
2	4	2
3	2	2
4	0	2

As the production of Good X increases by one unit, the production of Good Y decreases by 2 units each time. Thus, MOC remains constant at 2 units.

Therefore, the PPC will be a downward-sloping straight line due to constant MOC.