Generally, on a linear two-good production possibilities curve, the opportunity cost of the good measured on the vertical axis is:
A) one minus the opportunity cost of the good measured on the horizontal axis.
B) the reciprocal of the opportunity cost of the good measured on the horizontal axis.
C) the slope of the production possibilities line.
D) the negative of the opportunity cost of the good measured on the horizontal axis.

Question

Quizplus · Accepted Answer

The opportunity cost of the good measured on the vertical axis is the reciprocal of the opportunity cost of the good measured on the horizontal axis. This is because the slope of the production possibilities line measures the opportunity cost of the good on the vertical axis in terms of the good on the horizontal axis, and the slope is the ratio of the changes in the two goods, which is the reciprocal of the opportunity cost of the good measured on the horizontal axis.

Generally, on a Linear Two-Good Production Possibilities Curve, the Opportunity