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What will be the shape of Production Possibility Curve (PPC) when marginal opportunity cost is constant?
- a)Concave
- b)C) when marginal opportunity cost is constant?A) Concave
- c)when marginal opportunity cost is constant?A) ConcaveB) ConvexC) Backward bending
- d)Straight line
Correct answer is option 'D'. Can you explain this answer?
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Verified Answer
What will be the shape of Production Possibility Curve (PPC) when marg...
The slope of PPC depends upon marginal opportunity cost. a constant opportunity cost indicates that given resources are equally suited for the production of two goods. So when opportunity cost is constant, PPC curve is a straight line.
Most Upvoted Answer
What will be the shape of Production Possibility Curve (PPC) when marg...
Opportunity cost is the return from next best alternative when one commodity has sacrificed...
When good A sacrificed it's production for the production of good B,,leads to increase in production of good B, is called opportunity cost.
When such sacrifice of one good is constant(Opportunity cost is constant) at production of different units to another good makes the ppf as a straight line
When good A sacrificed it's production for the production of good B,,leads to increase in production of good B, is called opportunity cost.
When such sacrifice of one good is constant(Opportunity cost is constant) at production of different units to another good makes the ppf as a straight line
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What will be the shape of Production Possibility Curve (PPC) when marg...
The correct answer is option 'D' - Straight line.
Explanation:
When the marginal opportunity cost is constant, the shape of the Production Possibility Curve (PPC) will be a straight line.
Here's why:
1. Definition of Marginal Opportunity Cost:
The marginal opportunity cost refers to the additional cost that is incurred when producing one more unit of a particular good, while sacrificing the production of another good. In other words, it represents the trade-off between producing different goods.
2. Constant Marginal Opportunity Cost:
When the marginal opportunity cost is constant, it means that the trade-off between producing different goods remains the same regardless of the quantity produced. This implies that the resources used to produce goods are perfectly substitutable.
3. Linear Relationship:
Since the marginal opportunity cost is constant, the relationship between the two goods being produced is linear. This means that the resources used to produce one good can be easily shifted to produce the other good without any increase in cost.
4. Fixed Exchange Rate:
A constant marginal opportunity cost implies a fixed exchange rate between the two goods. This means that the ratio at which one good can be exchanged for the other remains constant along the production possibilities curve.
5. Straight Line PPC:
Given the above points, the shape of the PPC will be a straight line, representing the constant trade-off between the two goods. The slope of the PPC will be constant, indicating the exchange rate between the goods.
In summary, when the marginal opportunity cost is constant, the PPC will be a straight line as it represents a fixed exchange rate between the two goods being produced.
Explanation:
When the marginal opportunity cost is constant, the shape of the Production Possibility Curve (PPC) will be a straight line.
Here's why:
1. Definition of Marginal Opportunity Cost:
The marginal opportunity cost refers to the additional cost that is incurred when producing one more unit of a particular good, while sacrificing the production of another good. In other words, it represents the trade-off between producing different goods.
2. Constant Marginal Opportunity Cost:
When the marginal opportunity cost is constant, it means that the trade-off between producing different goods remains the same regardless of the quantity produced. This implies that the resources used to produce goods are perfectly substitutable.
3. Linear Relationship:
Since the marginal opportunity cost is constant, the relationship between the two goods being produced is linear. This means that the resources used to produce one good can be easily shifted to produce the other good without any increase in cost.
4. Fixed Exchange Rate:
A constant marginal opportunity cost implies a fixed exchange rate between the two goods. This means that the ratio at which one good can be exchanged for the other remains constant along the production possibilities curve.
5. Straight Line PPC:
Given the above points, the shape of the PPC will be a straight line, representing the constant trade-off between the two goods. The slope of the PPC will be constant, indicating the exchange rate between the goods.
In summary, when the marginal opportunity cost is constant, the PPC will be a straight line as it represents a fixed exchange rate between the two goods being produced.
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What will be the shape of Production Possibility Curve (PPC) when marginal opportunity cost is constant?a)Concaveb)C) when marginal opportunity cost is constant?A) Concavec)when marginal opportunity cost is constant?A) ConcaveB) ConvexC) Backward bendingd)Straight lineCorrect answer is option 'D'. Can you explain this answer?
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