Question

Giving reason, comment on the shape of production possibilities curve based on the following schedule:

Good-X (Units)	$0$	$1$	$2$	$3$	$4$
Good-Y (Units)	$8$	$6$	$4$	$2$	$0$

Answer 1

Good-X (Units)	Good-Y (Units)	Marginal Opportunity Cost
$0$	$8$	-
$1$	$6$	$\frac{2}{1}=2$
$2$	$4$	$\frac{2}{1}=2$
$3$	$2$	$\frac{2}{1}=2$
$4$	$0$	$\frac{2}{1}=2$

The schedule shows that the marginal opportunity cost of producing more of Good-X in place of Good-Y is constant. Accordingly, production possibility curve is to be a downward sloping straight line.