Question

Which of the following is a reason for the negative slope of the PPF?

• A. Inverse relationship between the use of technology and the use of natural resources.
• B. Scarcity, i.e., at any point in time we have limited amount of productive resources.
• C. Resource specialisation.
• D. Increasing opportunity costs.

Answer 1

Answer: (B)

Scarcity, i.e., at any point in time we have limited amount of productive resources.

The slope of production possibility curve represents the marginal opportunity cost, which refers to the additional sacrifice that would have to be made when resources and technology are shifted from production of one commodity to the other owing to limited resources. This opportunity cost between two goods is increasing which is denoted through the negative slope of PPC.