What does the line represent in the production possibility curve?

What does the line represent in the production possibility curve?

Key features of the PPC A straight line represents constant opportunity costs, and a bowed out line represents increasing opportunity costs.

Why are some PPC graphs straight line?

The shape of a production possibility curve (PPC) reveals important information about the opportunity cost involved in producing two goods. When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.

What do we call the actual line on a production possibilities graph?

Production Possibility Frontier (PPF) Definition.

How do you read a production possibility graph?

The Shape of the Production Possibilities Curve The production possibility curve bows outward. The highest point on the curve is when you only produce one good, on the y-axis, and zero of the other, on the x-axis. On the chart, that is Point A, where the economy produces 140,000 apples and zero oranges.

Can production possibility curve be a straight line give an example?

When the opportunity cost remains constant, the shape of the Production possibility Frontier curve is a straight line, Example: A company is involved in the production of goods such as Cheese and Butter. For every quantity of the butter relinquished, there is production of an extra quantity of Cheese.

Is the production possibilities curve a straight line?

PPF is straight, the resources are perfectly substitutable. Opportunity Costs are constant, as shown by the straight PPF. If the PPF is straight, Opportunity Costs are constant, as shown by the straight PPF.

Why is the production possibilities curve bowed outward?

The curve bows outwards because of the Law of Increasing Opportunity Cost, which states that the amount of a good which has to be sacrificed for each additional unit of another good is more than was sacrificed for the previous unit.