Question

Why is the production possibility frontier downward sloping?

Answer 1

The production possibility frontier is downward sloping because of the concept of opportunity cost. As an economy produces more of one good, it must give up some of the production of another good. This trade-off occurs because resources are limited and must be allocated efficiently. Therefore, as an economy moves along the production possibility frontier and increases its production of one good, it must decrease its production of another good, resulting in a negative relationship between the two goods. This negative relationship is reflected in the downward slope of the production possibility frontier.