Question:
On a diagram of a production possibilities frontier, opportunity cost is represented by
(1) the slope of the production possibilities frontier.
(2) a point inside the production possibilities frontier.
(3) a ray through the origin.
(4) a point on the vertical axis.
(5) a point on the horizontal axis.
Correct Answer:
(1)
Answer Explanation:
The slope of the PPF measures the marginal rate of transformation. It calculates exactly how much of the good on the vertical axis must be given up to produce one more unit of the good on the horizontal axis, which is the exact definition of opportunity cost.
Topic: PPC Year: 2018
Leave a Reply