Question

If a country wants to produce more of one good, it has to produce less of the other - what implication does this statement have on the shape of PPC?

• A. It becomes upward sloping.
• B. It becomes downward sloping.
• C. It falls at constant rate
• D. It is convex to the origin.

Answer 1

The correct option is B It becomes downward sloping.

The shape of PPC will be concave and downward sloping as to produce one extra unit of a commodity more and more units of another commodity need to sacrificed. This implies an increasing marginal opportunity cost.