Question

A convex to the origin PPC implies __________.

• A. increasing marginal cost
• B. increasing marginal opportunity cost
• C. decreasing marginal opportunity cost
• D. constant marginal opportunity cost

Answer 1

Answer: (C)

decreasing marginal opportunity cost

The slope of production possibility curve is the marginal opportunity cost which refers to the additional sacrifice that an economy must make when it shifts resources and technology from production of one commodity to the other. Therefore, if marginal opportunity cost decreases then PPC will be convex to the origin owing to decreasing slope.