Question

Give the properties of production possibility curve.

Answer 1

The two basic property of production possibility curve are:

• It slopes downward from left to right- Production possibility curve slopes downward because both the variables involve in the equation are inversely related as one increase then other one decreases and vice versa because the resources are constant.
  
• The curve is concave to the origin- Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity is sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of production possibility curve.