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What is the meaning of production possibility curve and writes its properties?
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What is the meaning of production possibility curve and writes its pro...
Two basic properties,,,,
1-ppc slopes downwards because as we increase in the production of one commodity we must have to decrease in the production of another commodity,,
2-it is concave to the origin because of Law of increasing Marginal opportunity cost,,
Orr
Marginal rate of transformation
Community Answer
What is the meaning of production possibility curve and writes its pro...
The curve which shows the combinations of two goods and services that can be produced with fuller utilisation of a given amount of resources in the most efficient way and with a given production technology is called Production Possibility Curve.The following are the properties of a PPC. i. Concave to Origin: PPC curve is concave to the origin. This is because of the increasing opportunity cost i.e. in accordance with the law of increasing opportunity cost. ii. Increasing Marginal Rate of Transformation: The slope of PPC (MRT) shows, for the production of every additional unit of one good, more and more units of other good has to be sacrificed. In other words, as we move down along the PPC, the slope of PPC (or MRT) increases. iii. Downward Sloping: PPC curve is downward sloping as more production of one good is associated with the decline in production of the other good. iv. Optimum utilisation of resources: The points that lie on the Production Possibility Frontier are associated with full employment of resources and efficient utilisation of the available technology.
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What is the meaning of production possibility curve and writes its properties?
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