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)	$20$	$18$	$14$	$8$	$0$

Answer 1

Good-X (Units)	Good-Y (Units)	Marginal Opportunity Cost
$0$	$20$	-
$1$	$18$	$\frac{2}{1}=2$
$2$	$14$	$\frac{4}{1}=4$
$3$	$8$	$\frac{6}{1}=6$
$4$	$0$	$\frac{8}{1}=8$

The schedule shows that the marginal opportunity cost of production more of Good-X in place of Good-Y is rising. Accordingly, production possibility curve is to be concave to the origin.