The slope of the production possibility frontier exhibit ______.

relative marginal costs of the two goods

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relative price of the two goods

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relative profitability of two goods

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marginal rate of substitution between two goods

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Solution

The correct option is A relative marginal costs of the two goods
The slope of PPF indicates the relative marginal cost of two goods that is the opportunity cost of one good in terms of another.
PPF shows all the maximum possible combination of two goods, which can be produced with the given level of resources and technology.
In such a case, more of one good can be produced by taking resources away from the production of another good.
Thus the slope indicates the inverse relationship between the change in quantity one commodity to the change of quantity of another commodity.

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