Why is production possibility curve NOT a straight line?
February 20th, 2023
Because of increasing MRS (marginal rate of substitution).
As more unit of good 1 is produced,there will be a decrease in the production of good 2(This is the theory of MRS).
Only when MRS/MOC is constant, will the ppc be a straight line.
In an economy (usually) there will be some MRS when producing two goods because of scarcity.