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Question
What will be the shape of PPC when marginal opportunity cost is constant?
What will be the shape of PPC when marginal opportunity cost is constant?
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Solution
The correct option is D Straight line
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 remains constant then Production possibility curve will be a straight line owing to
constant slope of the line.
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 remains constant then Production possibility curve will be a straight line owing to constant slope of the line.
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