Question

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

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

Answer 1

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

Good X (Units)	Good Y (Units)	MOC
0	20	–
1	18	2
2	14	4
3	8	6
4	0	8

As the production of Good X increases by one unit, the production of Good Y decreases by 2, 4, 6 and 8 units respectively. Thus, MOC is continuously increasing. Therefore, the PPC will be concave to the origin due to increasing MOC.