Read the following statements - Assertion (A) and Reason (R):
Assertion: Production possibility frontier is concave to the origin.
Reasoning: The marginal rate of transformation increases when we move on the PPC downwards.
From the given alternatives choose the correct one:
Answer & explanation
Correct answer: option 1
The correct answer is option 1: Both Assertion (A) and Reason (R) are true and Reason (R) is the correct explanation of Assertion (A).
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Assertion (A): The production possibility frontier (PPF) is typically concave to the origin. This shape reflects increasing opportunity costs as more of one good is produced at the expense of another.
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Reason (R): The marginal rate of transformation (MRT) refers to the rate at which one good must be sacrificed to produce an additional unit of another good. As you move downward along a concave PPF, the MRT increases because the opportunity cost of producing one more unit of a good increases as you shift resources away from the other good.
Thus, the reason correctly explains why the PPF is concave to the origin.