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Question

If the marginal (additional) opportunity cost were to show a decreasing trend, then the PPC would be _____________.

A
convex to the origin
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B
straight line
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C
backward bending
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D
concave to the origin
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Solution

The correct option is B convex to the origin

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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