Question

Given the following data, draw a production possibility curve. Also find marginal opportunity cost.

Possibilities	$A$	$B$	$C$	$D$	$E$	$F$
Wheat (kg)	$100$	$95$	$85$	$70$	$50$	$25$
Rice (kg)	$0$	$10$	$20$	$30$	$40$	$50$

Answer 1

Wheat (kg)	Rice (kg)	Marginal Opportunity Cost
$100$	$0$	-
$95$	$10$	$\frac{5}{10}=0.5$
$85$	$20$	$\frac{10}{10}=1.0$
$70$	$30$	$\frac{15}{10}=1.5$
$50$	$40$	$\frac{20}{10}=2.0$
$25$	$50$	$\frac{25}{10}=2.5$

The Table shows that the marginal opportunity cost of producing more of rice in place of wheat is rising. Accordingly, production possibility curve is found to be concave to the origin.