Y
|
Concave PPC
|
Y
|
Straight line
| |
because
|
PPC
| |||
Good
|
Good
| |||
MOC
|
because
| |||
increasing
|
MOC Constant
| |||
Good X
|
Good X
|
Production Possibility Frontier
Features
Good Y
|
Convex PPC because MOC decreasing
Good X
Slopes downward from left to right because if production of one good is to increase then production of other good has to be sacrificed.
Concave to the origin because of increasing marginal opportunity cost or (MRT)
Rightward shift of PPC indicates increase in resources and improvement in technology.
Leftword shift of PPC indicates decrease in resources and degradation in technology.
Marginal Rate of Transformation (MRT) is the ratio of number of units of a good sacrificed to increase one more unit of the other good.
MRT can also called Marginal Opportunity Cost. It is defined as the additional cost in terms of number of units of a good sacrificed to produce an additional unit of the other good.