Given a production possibility curve for good X (on the x-axis) and good Y (on the y-axis), the opportunity cost of increasing good X is greatest when the slope of the production possibility curve is:
A. −6.
B. −4.
C. 6.
D. 4.
Answer:A
Given a production possibility curve for good X (on the x-axis) and good Y (on the y-axis), the opportunity cost of increasing good X is greatest when the slope of the production possibility curve is:
A. −6. B. −4. C. 6. D. 4.
Explanation: A slope of –6 means that one must give up 6Y to get 1X. A slope of –4 means that one must give up only 4Y to get 1X. This analysis implies an inverse relationship between the production of the two goods.