If a country produces good Y (measured on the vertical axis) and good X (measured on the horizontal axis), then the absolute value of the slope of its production possibility frontier is equal to
A) the opportunity cost of good X.
B) the price of good X divided by the price of good Y.
C) the price of good Y divided by the price of good X.
D) the opportunity cost of good Y.
E) the cost of capital (assuming that good Y is capital intensive) divided by the cost of labor.

Question

Quizplus · Accepted Answer

The absolute value of the slope of the production possibility frontier represents the opportunity cost of producing one good in terms of the other. Therefore, the correct answer is A, which states that the absolute value of the slope of the PPF is equal to the opportunity cost of producing good X.

If a Country Produces Good Y (Measured on the Vertical