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What is the shape and slope of the production possibility curve (2 Point)? Explain the rationale...

What is the shape and slope of the production possibility curve (2 Point)? Explain the rationale behind your answer. (3 Point)

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Answer #1

A production possibilities curve shows the combinations of two goods an economy is capable of producing. The downward slope of the production possibilities curve is an implication of scarcity. The bowed-out shape of the production possibilities curve results from allocating resources based on comparative advantage

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The slope of production possibility curve is marginal opportunity cost which refers to the additional sacrifice that a firm makes when they shift resources and technology from production of one commodity to the other. Since resources are use specific, therefore every time when one more unit of a commodity is produced more units of the other commodity is sacrificed that results in increasing marginal opportunity cost which leads to the concave shape of production possibility curve.

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