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Question
Giving reason, comment on the shape of Production Possibilities Curve based on the following table:
| Good X (units) | Good Y (units) |
| 0 | 4 |
| 1 | 3 |
| 2 | 2 |
| 3 | 1 |
| 4 | 0 |
Numerical
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Solution
\[ \text{MOC}=\frac{\text{Loss of Good Y}}{\text{Gain of Good X}} \]
|
Good X (Units) |
Good Y (Units) |
MOC |
|---|---|---|
|
0 |
4 |
– |
|
1 |
3 |
1 |
|
2 |
2 |
1 |
|
3 |
1 |
1 |
|
4 |
0 |
1 |
As the production of Good X increases by one unit, the production of Good Y decreases by one unit each time. Thus, MOC remains constant at 1 unit.
Therefore, the PPC will be a downward-sloping straight line due to constant MOC.
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