The absolute value of the slope of the production possibilities frontier at the production point provides a measure of both the relative price of S in terms of T and the opportunity cost of producing one more units of S calculated in terms of output of T foregone.

Question

Quizplus · Accepted Answer

This statement is true as the absolute value of the slope of the production possibilities frontier (PPF) represents the opportunity cost of producing one good in terms of the other. In this case, the opportunity cost of producing one more unit of S is measured by the relative price of S in terms of T, which is equivalent to the absolute value of the slope of the PPF at the production point.

The Absolute Value of the Slope of the Production Possibilities