Question

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Search inderdeep kau ASSIGNMENT 1 (BUSI 1023-WINTER 2020) (1) - Protected ViewSaved Layout References Mailings Review View Help Enable Editing the Internet can contain viruses. Unless you need to edit, it's safer to stay in Protected View 3. Consider a simple economy producing two goods cars and milk. The following table gives several points on this economy's Production Possibility Frontier (PPF) Milk (1000's of gallons (1000's year) year) Cars a Graph this economy's PPF and label the axes as you deem fit, the interpretation of opportunity cost does NOT change with the delineation of the aves. b. Why is the production possibility frontier downward sloping? Explain the underlying economic logic c. Why is the production possibility frontier strictly concare in this case Note that in some cases the PPF can be weakly concave' where a portion of the curve may be a linear segment. Strict concavity rules out such weakly concave segments. Does a linear PPF meet the criteria of both weak concavity and weak convexity? to search

Answer 1

b) It can be mentioned that the production possibility frontier is downward sloping curve because the budget is usually constant and if one has to increase the consumption on good then the other good consumption automatically decreases all in all in that is the reason why it is negatively sloped.

Cars 10 20 30 40 50 60 Merk

c) It can be mentioned that the production possibility frontier is strictly concave in this case because there is a trend of increasing opportunity costs and consumption of milk increases the opportunity cost increases all in all