Question

PPC is concave to origin because of _____________.

• A. decreasing opportunity cost
• B. increasing opportunity cost
• C. constant opportunity cost
• D. none of the above

Answer 1

Answer: (B)

increasing opportunity cost

PPF is concave to origin because of the increasing marginal opportunity costs. That is more and more units of one commodity are sacrificed to gain an additional unit of another commodity. Due to this increasing marginal cost, PPF becomes more and more steep, thus the curve bends outwards and becomes concave to origin.