A production possibilities curve is negatively sloped because:
A)unemployment increases as an economy moves down along the curve.
B)along the curve, production of one good must be sacrificed in order to increase production of another.
C)unemployment decreases as an economy moves down along the curve.
D)as the price falls, more goods are purchased.

Question

A production possibilities curve is negatively sloped because:
A)​unemployment increases as an economy moves down along the curve.
B)​along the curve, production of one good must be sacrificed in order to increase production of another.
C)​unemployment decreases as an economy moves down along the curve.
D)​as the price falls, more goods are purchased.

Quizplus · Accepted Answer

The negative slope of the production possibilities curve (PPC) indicates the concept of opportunity cost. As an economy moves down along the curve, it can produce more of one good only by sacrificing the production of another. This is because the resources are scarce and cannot be used to produce unlimited quantities of both goods at the same time. Therefore, the PPC shows the trade-off between the production of two goods, and the negative slope reflects the increasing opportunity cost of producing one good in terms of the other as the economy moves along the curve. Choices A, C, and D are incorrect because they do not explain the reason for the negative slope of the PPC.

A Production Possibilities Curve Is Negatively Sloped Because