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Question
If marginal opportunity cost is falling, the PPF would be _________.
If marginal opportunity cost is falling, the PPF would be _________.
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Solution
The correct option is D convex
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. Therefore, if marginal
opportunity cost decreases then PPC will be convex to the origin owing to decreasing slope.
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. Therefore, if marginal opportunity cost decreases then PPC will be convex to the origin owing to decreasing slope.
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