In the Context of the Production Possibilities Frontier, Opportunity Cost

question 117

Multiple Choice

In the context of the production possibilities frontier, opportunity cost can be measured by the

• A) ratio of the amounts of the two goods being produced.
• B) slope of the frontier.
• C) ratio of the costs of the two goods being produced.
• D) amount of labor needed to produce the goods and services.

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Definitions:

Payment to Labor

Compensation provided to workers for their labor, which can be in the form of wages, salaries, or benefits, for their contribution to production processes.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a factor of production, holding all other inputs constant.

Marginal Product

The increase in output that results from employing one more unit of a specific input, while holding other inputs constant.

Labor Input

The quantity of labor employed in the production of goods and services, usually measured in hours worked or number of workers.