Answer to Question #284027 in Economics for Hafsa

Question

Why does a production frontier that is concave from the origin indicate increasing opportunity costs in both commodities? What does the slope of the production frontier measure? How does the slope

change as the nation produces more of the commodity measured along the horizontal axis? more of the commodity measured along the vertical axis? 

Answer 1

PPC is concave to the origin because of increasing marginal opportunity cost. This is because in order to increase the production of one good by 1 unit more and more units of the other good have to be sacriced since the resources are limited and are not equally efficient in the production of both the goods.

The slope of the PPF indicates the opportunity cost of producing one good versus the other good, and the opportunity cost can be compared to the opportunity costs of another producer to determine comparative advantage.