The slope of the production possibilities frontier is defined to be the marginal rate of:
A) transformation.
B) technical substitution.
C) substitution.
D) profit.

Question

Quizplus · Accepted Answer

The slope of the production possibilities frontier (PPF) is defined as the marginal rate of transformation (MRT) because it reflects the opportunity cost of producing one good in terms of the other. As we move along the PPF and produce more of one good, we have to give up some amount of the other good. The MRT measures how much of one good we have to give up to produce an additional unit of the other good. Therefore, the correct answer is A.

The Slope of the Production Possibilities Frontier Is Defined to Be