The fact that the slope of the production possibilities curve becomes steeper as you move down...

Question:

The fact that the slope of the production possibilities curve becomes steeper as you move down along the curve indicates what?

Production Possibility Curve (PPC)

Production Possibility Curve shows the maximum possible output combinations of two goods or services an economy can produce when all resources are fully and efficiently utilized.

Answer and Explanation: 1

The fact that the slope of the production possibilities curve becomes steeper as we move down along the curve indicates that the principle of increasing opportunity costs is relevant.

Increasing opportunity cost means when we increase the production of one by one more unit of good X, we have to forgo more and more units of good Y. When the slope of the production possibilities curve becomes steeper, it represents increasing opportunity cost.


Learn more about this topic:

Loading...
Production Possibilities Curve: Definition & Examples

from

Chapter 11 / Lesson 28

Understand what the production possibilities curve is, and learn how to construct and interpret a production possibilities curve along with the example.


Related to this Question

Explore our homework questions and answers library