In equilibrium, with diminishing marginal products, the slope of the PPF is equal to:
A) the ratio of prices for the products.
B) the marginal product of labor.
C) the marginal product of capital.
D) the ratio of prices to the marginal product of labor.

Question

Quizplus · Accepted Answer

The slope of the production possibility frontier (PPF) in equilibrium, especially under the condition of diminishing marginal products, is equal to the ratio of prices for the products. This is because the slope reflects the opportunity cost of producing one good over another, which in equilibrium is determined by the relative prices of the goods.

In Equilibrium, with Diminishing Marginal Products, the Slope of the PPF