CBSE Class 11-commerce Answered
Expert Answer
a. Production possibility curve (PPC) refers to the curve showing various combinations of two goods which can be produced with the given resources and level of technology. The economy have to choose which good X or good Y to produce and at the units of quantity to be produced. If the more of good X to be produced and less of good Y to be produced. So it is rightly said that the economy has scarce resources which have alternative uses.
b. In the given diagram, PPC is a straight line which slopes downwards. Here the resources are equally efficient across the production of Good Y and Good X. If 1 unit of good Y need to be sacrificed for every additional unit of good X. So marginal rate of transformation is constant and equal to one. Therefore, AB is not a typical production possibility curve.
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