The slope of a line tangent to a country's production possibilities frontier measures the opportunity cost its residents incur when they opt to produce an additional unit of a good or service.

Question

Quizplus · Accepted Answer

The slope of the production possibilities frontier represents the opportunity cost of producing one good in terms of the other. When a country produces more of one good, it must give up some of the other good. The opportunity cost is the amount of the other good that must be given up to produce one additional unit of the first good. Therefore, the slope of the production possibilities frontier represents the opportunity cost of producing more of one good.

The Slope of a Line Tangent to a Country's Production