University of Hong Kong The shape of Production Possibility Frontier A question students frequently asked regarding the PPF is what shape it should take on. The answer is it depends ...
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...University of hong kong the shape production possibility frontier a question students frequently asked regarding ppf is what it should take on answer depends let me look at three main possibilities consider following scenario there are units labor which only factor two products food and shelter linear suppose one unit requires to produce constant returns scale then x good y produced given by clearly straight line b concave towards origin quantity equal q where istheamountoflaborusedtoproducefood andshelter respectively note that in this case doubling input leads an output less than for instance while can or means earlier have greater productivity those hired later we call diseconomies decreasing under full utilization resource mustaddupto fromthe technologies know therefore when you plot curve will see ppfbetween typical from textbook remark absolute value slope dy dx increasing suces numerator denominator hencethewholetermmustbe c convex more smaller economies must add up xandq toseet...