The slope of a country's production possibility frontier is equal to _ and the optimal production point is located where the slope is equal to .Assume that output of good Y is measured on the vertical axis,output of good X is measured on the horizontal axis,MPL is the marginal product of labor with a subscript indicating which good,P is the price of a good,and w is the wage rate.
A)- MPLY/MPLX; - PX/PY
B)- MPLX/MPLY; - PX/PY
C)- PX/PY; - MPLY/MPLX;
D)- MPLY/w; - MPLF/w
E)- PX/w; - PY/w

Question

Quizplus · Accepted Answer

The slope of the production possibility frontier is equal to the ratio of the marginal product of labor in the two sectors, MPLY/MPLX. The optimal production point is located where the slope of the production possibility frontier is equal to the ratio of the prices of the two goods, -PX/PY.

The Slope of a Country's Production Possibility Frontier Is Equal