Consider a production possibilities frontier (PPF) with Good X on the horizontal axis and Good Y on the vertical axis. The slope of the PPF tells us the _____ of producing one additional unit of Good X.Multiple choice question.profitabilitytotal costaverage costopportunity cost

On a production possibilities frontier (PPF) with Good X on the horizontal axis and Good Y on the vertical axis, we can say that the slope of the PPF (in absolute value) equals the opportunity cost of producing Good X with respect to the production of Good Y. This is true because the slope:Multiple choice question.measures how much of Good X and Good Y can be produced.is always positive.describes the gains the economy experiences when it trades with another economy.describes the trade-off resulting from the production of Good X in terms of Good Y.

When production is characterized by constant opportunity costs, the resulting production possibilities frontier will be a __ line.Multiple choice question.horizontalstraightverticalcurved

Consider China and US in a Ricardian world. Each country produces two goods, corn andwheat. Each country has 600 units of labour hour available. The table of unit labour costs forproduction of each good in each country is below:Corn WheatChina 6 4US 2 2a. Derive China’s production possibility frontier (PPF). (Write down an equation of China’sPPF)b. Draw China’s PPF. Have the quantity of corn on the horizontal axis.(Derive US’sproduction possibility frontier (PPF). (Write down an equation of US’s PPF)c. Draw US’s PPF.Have the quantity of corn on the horizontal axis.d. Derive US’s production possibility frontier (PPF). (Write down an equation of China’sPPF)e. What is the slope of PPF of China? Explain your answer.f. What is the slope of PPF of US? Explain your answer.g. In the absence of trade, what would be the prices of corn in terms of wheat in China?

When production is characterized by opportunity costs, the resulting production possibilities frontier will be a straight line.

The production combinations that fall directly on the production possibilities frontier (curve) are and efficient. (Use one word to fill in the blank.)