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It is "convex to the origin" in the sense that if we "stand" at the origin, the point $(0,0)$, and "look towards" the graph, we will perceive it as convex. In contrast, if we stand "above" such a graph looking towards it, taking "our" position as being the origin, it will be concave.
Production possibility curve is concave to the origin. It shows the operation of the law of increasing opportunity cost. In figure when we move from A to B, economy has to forgo one million quintals of wheat.
The shape of a PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good. Thus, MRT increases in absolute size as one moves from the top left of the PPF to the bottom right of the PPF.
Production possibility curve (PPC) is concave to the origin because marginal opportunity cost (Loss of output of Y Gain of output of X) of shifting resources from commodity Y to commodity X tends to rise. This happens because resources are use-specific.
The PPC stands concave to its point of origin on the graph which is a result of the increasing marginal rate of transformation. The shape of the PPC will also depend on whether there are increasing, decreasing, or constant costs of production. (Related Blog: An Introduction to Capital Budgeting)
21 Μαρ 2024 · What is the production possibilities curve? The production possibilities curve (PPC) is a graph that shows all combinations of two goods or categories of goods an economy can produce with fixed resources. Take the example illustrated in the chart.
14 Αυγ 2024 · An isoquant curve is a line on a graph that charts all the combinations of inputs that produce a specified level of output. Such a graph is used to illustrate the relative influence that...
