What does the slope of the production possibilities curve represent?
A)The slope represents the level of efficiency in production.
B)The slope represents the opportunity cost of producing one good instead of the other.
C)If the slope is greater than one, then production is being maximized, and if the slope is less than one, then production is not maximized.
D)The slope represents the number of factors of production required to produce the goods.
B) The slope represents the opportunity cost of producing one good instead of the other.
The correct answer is B) The slope represents the opportunity cost of producing one good instead of the other.
To understand why, let's first define the production possibilities curve (PPC). The PPC shows the maximum combinations of two goods that can be produced using all available resources and technology efficiently. It illustrates the trade-offs a society faces when allocating resources between two goods.
The slope of the PPC measures the rate at which one good must be given up to produce more of the other good. This is known as the opportunity cost. The opportunity cost represents the value of the next best alternative that must be sacrificed to produce an additional unit of a good.
For example, if the slope of the PPC is steep, it means that producing more of one good requires giving up a large amount of the other good. This indicates a high opportunity cost. Conversely, if the slope is shallow, producing more of one good requires sacrificing fewer units of the other good, indicating a lower opportunity cost.
So, in summary, the slope of the production possibilities curve represents the opportunity cost of producing one good instead of the other.