The relative costs of two goods produced by two countries can be determined by comparing the slopes of their production possibilities curves at their respective current levels of production.

Question

Quizplus · Accepted Answer

The slope of the production possibilities curve (PPC) represents the opportunity cost of producing one good over another. By comparing the slopes of the PPCs of two countries at their current levels of production, one can determine the relative costs of producing two goods in those countries.

The Relative Costs of Two Goods Produced by Two Countries