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, A is correct because the absolute value of the slope is equal to the opportunity cost of producing one unit of good X in terms of giving up the opportunity to produce one unit of good Y.

If a Country Produces Good Y (Measured on the Vertical