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प्रश्न
Why is a production possibilities curve downward sloping? Explain
उत्तर
Production possibility curve (PPC) is a downward sloping curve because the law of increasing opportunity cost applies here. Let us consider the following example
| Good X (Units) |
Good Y (Units) |
MOC = `"ΔY"/"ΔX"` |
| 0 | 20 | - |
| 1 | 18 | 2/1 = 2 |
| 2 | 14 | 4/1 = 4 |
| 3 | 8 | 6/1 = 6 |
| 4 | 0 | 8/1 = 8 |
The above schedule clearly states that the production of Good-X increases from Unit 1 to Unit 2, and correspondingly the units of Good-Y forgone is 2. While the production of Good-X increases from Unit 2 to Unit 3, 4 units of Good Y are forgone. With each additional unit of production of Good-X, the amount of Good-Y to be forgone increases. So, because of increasing opportunity cost, the production possibility curve (PPC) is concave to the origin and downward sloping curve.
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संबंधित प्रश्न
Explain the central problem of "choice of technique".
Giving reason comment on the shape of Production Possibilities curve based on the following schedule :
| Good X (units) | Good Y (units) |
| 0 | 10 |
| 1 | 9 |
| 2 | 7 |
| 3 | 4 |
| 4 | 0 |
What will be the impact of recently launched 'Clean India Mission' (Swachh Bharat Mission) on the Production Possibilities curve of the economy and why?
What will likely be the impact of large-scale outflow of foreign capital on Production Possibilities curve of the economy and why?
Giving reason comment on the shape of Production Possibilities curve based on the following schedule :
| Good X (units | Good Y (units) |
| 0 | 30 |
| 1 | 27 |
| 2 | 21 |
| 3 | 12 |
| 4 | 0 |
Giving reason comment on the shape of Production Possibilities curve based on the following schedule:
| Good X (units) | Good Y (units) |
| 0 | 16 |
| 1 | 12 |
| 2 | 8 |
| 3 | 4 |
| 4 | 0 |
What will be the impact of "Education for All campaign" (Sarv Shiksha Abhiyan) on the Production Possibilities Curve of the Indian economy and why?
What will likely be the impact of the large-scale inflow of foreign capital in India on Production Possibilities Curve and why?
Why is Production Possibilities Curve concave? Explain
Explain the central problem of "What is produced and in what quantities.".
In what circumstances may the production possibility frontier shift away from the origin? Explain.
Normal profits for a firm imply that the firm is breaking even. Explain.
