the opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

the opportunity cost of obtaining more of one good is shown on the production possibilities frontier as the

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Nature

The opportunity cost of obtaining more of one good is shown on the production possibilities frontier (PPF) as the amount of the other good that must be given up. This is because the PPF illustrates the tradeoff between the production of two goods, given fixed resources and technology. Moving along the curve to produce more of one good requires sacrificing some quantity of the other good, which represents the opportunity cost

. More specifically:

  • The PPF is downward sloping, reflecting that to increase production of one good, production of the other must decrease, showing the opportunity cost
  • The slope of the PPF at any point indicates the opportunity cost of producing one more unit of a good in terms of the amount of the other good forgone
  • If the PPF is bowed outward (concave), opportunity costs increase as more of one good is produced, meaning increasingly larger amounts of the other good must be sacrificed
  • If the PPF is a straight line, opportunity costs are constant, so the tradeoff between goods remains the same regardless of the production level

In summary, the opportunity cost on the PPF is visualized as the quantity of the other good that must be given up to gain more of the first good.

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