The slope of the production possibilities frontier at a given point indicates ______.
A) the preferences of a country.
B) a country's total gains from trade.
C) a country's opportunity cost of production.
D) a country's trade balance.

Question

Quizplus · Accepted Answer

The slope of the production possibilities frontier at a given point indicates a country's opportunity cost of production. Opportunity cost is the cost of one option in terms of the next best alternative. Therefore, the slope of the PPF shows how much of one good must be given up to produce an additional unit of the other good. This represents the opportunity cost of producing one good in terms of the other, and is represented by the slope of the PPF.

The Slope of the Production Possibilities Frontier at a Given