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Giving reasons comment on the shape of Production Possibilities curve based on the following schedule: {:("Good X (units)","Good Y (units)"),(0,16),(1,12),(2,8),(3,4),(4,0):} |
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Answer» Solution :Based on the schedule given below, we can say that PPC is a downward sloping straight line. This is because the OPPORTUNITY cost of producing one good (i.e. Good X) in terms of another (i.e. Good Y) remains the same, that is, 4 (IGNORING the minus sign). `{:("Good X","Good Y","Opportunity"),("(units)","(units)","Cost"),(0,16,-),(1,12,4),(2,8,4),(3,4,4),(4,0,4):}` The FOLLOWING figure depicts the shape of PPC.  THUS, the shape of PPC is downward sloping straight line WHICHCAN be attributed to the constant opportunity cost. |
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