The slope of the Production Possibilities Frontier is:
A)The marginal rate of technical substitution.
B)The marginal revenue product.
C)The marginal rate of substitution.
D)The marginal rate of transformation.

Question

Quizplus · Accepted Answer

The slope of the Production Possibilities Frontier is known as the marginal rate of transformation (MRT). It represents the opportunity cost of producing one good in terms of the other. Therefore, the best choice is D, the marginal rate of transformation. Choices A, B, and C are not accurate descriptions of the slope of the PPF. The slope of the production possibilities frontier represents the opportunity cost of producing one good in terms of the other. It is also known as the marginal rate of transformation (MRT). As we move down along the PPF, we must give up increasing amounts of one good to produce the other. This increasing opportunity cost is reflected in a steeper slope. Therefore, the best choice is D, the marginal rate of transformation.

The Slope of the Production Possibilities Frontier Is