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If we move along the Production Possibility Frontier from point 'a' to point 'b', what is our opportunity cost?

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User Matiasf
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Final answer:

Moving from point 'a' to 'b' on the Production Possibility Frontier involves an opportunity cost, which is what must be given up (e.g., healthcare) to gain more of another good (e.g., education).

Step-by-step explanation:

If we move along the Production Possibility Frontier (PPF) from point 'a' to point 'b', our opportunity cost would be what we have to give up in terms of one good in order to produce more of another good. For instance, if a society is operating at point B on the PPF, which shows the tradeoff between healthcare and education, and decides to produce more education by moving to point C, the society will have to give up some healthcare. Consequently, the opportunity cost of the additional education is the amount of healthcare that has to be forgone. This is comparable to understanding the budget constraint in a personal financial context. The slope of the PPF indicates the opportunity cost which is the absolute value of the slope at any given point on the curve.

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User Echo
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