Opportunity cost production possibility curve. MRT. Curve of PPC shift in ppc slope of ppc.

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             OPPORTUNITY COST

   It is the cost of next best alternative for gone.

    PRODUCTION POSSIBILITY                           CURVE (PPC)

                          OR

         PRODUCTION FRONTIER 

  It refers to geographical representation Possible combinations of two goods.   That can be produced by given         resources.


    Marginal: An additional              unit.

MRT: Marginal Rate of Transformation.

It is also called marginal opportunity cost. It is the rate at which output of good-y is sacrificed for every additional unit of good-x.

Note: MRT is slope of ppc.


Wheat       clothes.        MRT

100.             0.                 -------
90.                1.                  10
70.                2.                  20
40.                3.                  30
0.                  4.                  40






                    loss of output y

  MRT=    ------------------------

               Gain of output x

                         ∆wheat

                     = ---------------

                         ∆clothes


   Underutilization of                        resources.





               SHIFT IN PPC

• Growth resources.




• If change in technology efficient technology in good -y.








Concave ppc: 

                            Because MRT increasing. That                                is slope of ppc.

Downward ppc:

                           Limited resources we have to                                 produced the production of one                             commodity to increase the other















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