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Case Interview Prep

Category - Economics

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A Production Possibilities Curve is concave to the origin due to:
  1. overconsumption by consumers
  2. inefficient processes
  3. decreased raw materials availability
  4. increased opportunity costs
Explanation
Answer: D -A Production Possibilities Curve (PPC) is concave to the origin due to increased opportunity costs.

Key Takeaway: A PPC is concave to the origin to reflect increasing opportunity costs associated with increasing output of manufactured goods. A PPC can also be linear or convex depending on a number of factors such as transformation rate and technological capability.
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