Understanding the Slope of the Production Possibilities Frontier

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Question:

The slope of the production possibilities frontier at a given point indicates _____.

a country's opportunity cost of production

a country's trade balance

a country's total gains from trade

the preferences of a country

Answer:

The slope of the production possibilities frontier (PPF) at a given point indicates a country's opportunity cost of production.

The PPF illustrates the trade-offs between two goods that a country can produce, and the slope represents the rate at which one good must be sacrificed to produce more of the other, reflecting the opportunity cost.