Generally, the production possibility curve(PPC) is __________ to the origin.
A
convex
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B
parallel
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C
concave
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D
perpendicular
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Solution
The correct option is C concave The slope of
production possibility curve is marginal opportunity cost which refers to the
additional sacrifice that a firm makes when they shift resources and technology
from production of one commodity to the other. Since resources are use
specific, therefore every time when one more unit of a commodity is produced
more units of the other commodity is sacrificed that results in increasing
marginal opportunity cost which leads to the concave shape of PPC.