   Chapter 2, Problem 4QP

Chapter
Section
Textbook Problem

Look back at Exhibit 4 and notice that the slope between points A and B is relatively flatter than it is between points C and D. What does the slope of a curve between two points have to do with the opportunity cost of producing additional units of a good? To determine

Calculation of slope.

Explanation

Figure 1 shows the PPF curve of good X and houses.

In figure 1, vertical axis measures the good X and horizontal axis measures houses. The concave curve is the PPF (production possibility frontier).

The general formula for calculating slope is given below.

Slope=Cost of good Xpresent Costof good XpreviousQuantity of housespresent Quantity housesprevious        (1)

Substitute the respective values in equation (1) to calculation the slope of AB

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