Question

PPC when concave, convex and straight line

Answer 1

Dear Student,
The shape of the PPC curve depends on MRT which is marginal rate of transformation. It is the ratio of number of units of a commodity sacrificed in order to gain an additional unit of another commodity.

When more and more units of a commodity are sacrificed to gain an additional unit of another commodity, then the shape of the PPC is concave. This is termed as increasing marginal rate of transformation.
When less and less units of a commodity are sacrificed to gain an additional unit of another commodity, then the shape of PPC is convex. This is known as decreasing marginal rate of transformation. (It is an imaginary situation as MRT always increases)
When equal units are sacrificed to gain an additional unit of another commodity, then the shape of PPC is a downward sloping straight line. In this marginal rate of transformation is constant. (It is an imaginary situation as MRT always increases)

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