A production possibility curve is concave to the point of origin because of
A)increasing marginal rate of transformation (mrt)
B)increasing marginal opportunity cost (moc)
C)both of the above
D)decreasing marginal rate of transformation

Question

Quizplus · Accepted Answer

The production possibility curve is concave to the point of origin because of both increasing marginal rate of transformation (MRT) and increasing marginal opportunity cost (MOC). This reflects the law of increasing opportunity costs, which states that as production of one good increases, the opportunity cost to produce an additional unit of this good increases, due to factors of production not being perfectly substitutable between goods.

A Production Possibility Curve Is Concave to the Point of Origin