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Why is the PPC Downward Sloping?

 If we look at the PPC, we observe two things with respect to its shape. Firstly, it is downward sloping and secondly, it is concave to origin.

PPC is a Downward Sloping Curve 

A downward sloping curve means that when the production of one good is increased, the production of the other has to be decreased in order to be on the same curve. This means the increase in one good is not possible without decrease in the other good. 

If we look at the PPC, we find that in order to increase the production of rice, the production of wheat has to be decreased. This is because the resources are being already fully utilized, so in order to increase the production of rice, more resources which are needed for rice’s production will come when some resources are taken out of the production of wheat.

Slope of PPC
In the diagram, when we move from a point B to C on the PPC, there is an increase in production of Rice and a decrease in the production of wheat. Hence, when the production of rice increases, that of wheat decreases as some resources are taken out of the production of wheat and used for the production of rice. This makes the PPC curve downward sloping or having a negative slope.

Slope of the PPC

The slope of the PPC is the ratio of change in the production of one good to the change in the production of the other when there is a movement along the PPC from one point on the curve to another point

More specifically, when we move from a point B to C on the PPC, some resources are removed from the production of wheat and put to use for the production of rice, leading to fall in the production of wheat and rise in the production of rice. 

Thus, slope of PPC is measured by the loss of production of wheat divided by the gain in the production of rice when we move from a point B to C on the PPC. When, we move from a point B to C, the production of rice increases by 1 unit and that of wheat decreases by 2 unit, the slope can be written as

Slope of PPC =  Change in Wheat/Change in Rice

Or Slope of PPC=  Loss in the production of Wheat /Gain in the Production of Rice

                                    = -2/1 = -2

Key Points

  • As the resources are being fully utilized, so in order to increase the production of one good, the production of the other good has to be deceased leading to a downward sloping PPC. 
  • The slope of the PPC is the ratio of change in the production of one good to the change in the production of the other when there is a movement along the PPC from one point on the curve to another point.

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