The PPF Is Concave to the Origin Because

question 78

Multiple Choice

The PPF is concave to the origin because:

• A)the marginal rate of transformation increases as we move down the PPF.
• B)the marginal rate of technical substitution increases as we move up the PPF.
• C)the marginal rate of technical substitution decreases as we move up the PPF.
• D)the opportunity cost of producing a commodity decreases with increase in its production.

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Definitions:

Cost of Equity

The return a company must offer investors to compensate for the risk of investing in its equity, often estimated using models like the CAPM.

Growth Rate

The measure of an increase in a specific variable, such as revenue, within a particular period, often expressed as a percentage.

Risk Level

The degree of uncertainty associated with the returns on an investment, reflecting the potential for losses or lesser gains.

Cost of Equity

The return that shareholders require for investing in a company's equity, serving as a measure of the risk involved.