On a diagram of a production possibilities frontier, opportunity cost is represented by
A) a point on the vertical axis.
B) the slope of the production possibilities frontier, which indicates that to get more of one good requires less of another.
C) a ray through the origin.
D) a point on the horizontal axis.

Question

Quizplus · Accepted Answer

Opportunity cost is represented by the slope of the production possibilities frontier because it shows the tradeoff between producing one good versus another. As more of one good is produced, the opportunity cost of producing additional units of that good increases because resources are less suited for producing it, and more resources would need to be diverted from the other good.

On a Diagram of a Production Possibilities Frontier, Opportunity Cost