Why does PPC look convex to the origin?
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Why does PPC look convex to the origin?
PPC looks concave to the origin because of increasing marginal rate of transformation/substitution (or increasing marginal opportunity cost). It means that more and more units of commodity ‘y’ are to be sacrificed, to get each additional unit of commodity ‘x’.
Is the PPF convex to the origin?
Can PPF be Convex to the Origin? PPF can be convex to the origin if MRT is decreasing, i.e. less and less units of a commodity are sacrificed to gain an additional unit of another commodity. So, PPF is always concave shaped.
What happens when PPC is convex?
When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
What law causes the PPC curve to be concave to the origin?
this is because of the law of increasing costs. The bowed-out SHAPE of the PPC is a result of the law of increasing costs. We call this shape “concave to the origin”.
Why does PPC look concave to the origin?
PPC is concave to the origin because of increasing Marginal opportunity cost. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacriced since the resources are limited and are not equally efficient in the production of both the goods.
Why is PPC concave towards the origin?
PPC is concave to the origin because of increasing Marginal opportunity cost. This is because inorder to increase the production of one good by 1 unit more and more units of the other good have to be sacrificed since the resources are limited and are not equally efficient in the production of both the goods.
What is convex to the origin?
“Mathematically, a ‘convex to the origin’ curve is described by saying that if A and B are any two points on the curve, then a ray passing through the origin O and any point X on the line segment AB will meet the curve at most at one point D between O and X”.
Why is PPC concave to the origin explain with diagram?
Production Possibility Curve (PPC) is concave to the origin because of the increasing opportunity cost. As we move down along the PPC, to produce each additional unit of one good, more and more units of other good need to be sacrificed. This confirms the concave shape of PPC.
Why IC is convex to the origin?
Indifference curves are convex to the origin because as the consumer begins to increase his or her use of one good over another, the curve represents the marginal rate of substitution. The marginal rate of substitution goes down as the consumer gives up one good for another, so it is convex to the origin.
Why is IC convex to the origin?
The indifference curves are convex to the origin because of the diminishing marginal rate of substitution.
What does concave to the origin mean?
It measures how much of good Y is given up for one more unit of good X or vice versa. The shape of a PPF is commonly drawn as concave to the origin to represent increasing opportunity cost with increased output of a good.
Why is IC generally convex to the point of origin explain any three properties of indifference curve?
(ii) Indifference Curves are convex to the point of origin: An Indifference Curve will ordinarily be convex to the origin. This is because of Diminishing Marginal Rate of Substitution. (iii) Indifference Curve neither touches X-axis nor Y-axis: It is often assumed that a consumer buys a combination of two goods.