Question

The slope of the production possibility frontier is determined by the ________________ of expanding production of one good, measured by how much of the other good would be lost. A. absolute advantage B. relative cost C. opportunity cost D. comparative advantage

Answer 1

Answer: Option (C) is correct.

Explanation:

Production possibility frontier depicts all the combination of two goods that are to be produced with the limited or available resources require for production.

Opportunity cost is the benefit that is foregone for an individual by choosing one alternative over other alternatives available to him.

If the opportunity cost is lower for an individual then this will benefit him whereas if the opportunity cost is higher then this will not benefit the individuals.

Opportunity cost is also very useful for determining a country's comparative advantage.