In a production possibilities frontier graph,the cost of producing more units of a good is measured by the
A)area in the arc between the PPF and a straight line drawn between the starting point and the ending point.
B)amount of the other good or service that must be forgone.
C)dollar value of the resources used to produce the good.
D)dollar value of the additional output.
E)None of the above answers is correct.

Question

Quizplus · Accepted Answer

The cost of producing more units of a good is measured by the amount of the other good or service that must be forgone. This concept is known as opportunity cost, which is the value of the next best alternative that must be given up in order to pursue a certain action. As we move along the PPF, we have to give up some of one good in order to gain more of the other good. This tradeoff is the opportunity cost of producing more of a certain good.

In a Production Possibilities Frontier Graph,the Cost of Producing More