Read the following statements:
Assertion (A): The production possibility frontier is concave to the origin.
Reason (R): The marginal rate of transformation increases as we move down along the production possibility frontier.
Choose the correct answer from the options given below:
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).
Assertion (A): The production possibility frontier is concave to the origin. — True. In the corn and cotton example, the frontier bows outwards, away from the origin.
Reason (R): The marginal rate of transformation increases as we move down along the production possibility frontier. — True. Each extra unit of corn costs 1, then 2, 3 and 4 units of cotton. The cotton given up per extra unit of corn rises.
Why R explains A?
The cotton given up for one more unit of corn is the slope of the frontier. As this cost rises, the curve gets steeper as we move down it. A curve that keeps getting steeper bends outwards, which is the concave shape in A.
Note: The terms ‘concave to the origin’ and ‘marginal rate of transformation’ are not in the NCERT book (2026-27), but NTA asks questions on them, so such questions are included here. The marginal rate of transformation is the units of one good given up for one more unit of the other, that is, the opportunity cost of that extra unit.
NCERT (2026-27): “Production Possibility Frontier If all the resources are used in the production of corn, the maximum amount of corn that can be produced is 4 units and if all resources are used in the production of cotton, at the most, 10 units of cotton can be produced. The economy can also produce 1 unit of corn and 9 units of cotton or 2 units of corn and 7 units of cotton or 3 units of corn and 4 units of cotton. …” “If more of the scarce resources are used in the production of corn, less resources are available for the production of cotton and vice versa. Therefore, if we want to have more of one of the goods, we will have less of the other good. Thus, there is always a cost of having a little more of one good in terms of the amount of the other good that has to be forgone. This is known as the opportunity cost of an additional unit of the goods.” |