Authors libby rittenberg 69
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The slopes of the production possibilities curves for each plant differ. The
steeper the curve, the greater the opportunity cost of an additional
snowboard. Here, the opportunity cost is lowest at Plant 3 and greatest at
Plant 1.
The exhibit gives the slopes of the production possibilities curves for each
of the firm’s three plants. The opportunity cost of an additional snowboard
at each plant equals the absolute values of these slopes. More generally,
the absolute value of the slope of any production possibilities curve at any
point gives the opportunity cost of an additional unit of the good on the
horizontal axis, measured in terms of the number of units of the good on
the vertical axis that must be forgone.
The greater the absolute value of the slope of the production possibilities
curve, the greater the opportunity cost will be. The plant for which the
opportunity cost of an additional snowboard is greatest is the plant with
the steepest production possibilities curve; the plant for which the
opportunity cost is lowest is the plant with the flattest production
possibilities curve. The plant with the lowest opportunity cost of
producing snowboards is Plant 3; its slope of −0.5 means that Ms. Ryder
must give up half a pair of skis in that plant to produce an additional
snowboard. In Plant 2, she must give up one pair of skis to gain one more
snowboard. We have already seen that an additional snowboard requires
giving up two pairs of skis in Plant 1.
Comparative Advantage and the Production
Possibilities Curve
Attributed to Libby Rittenberg and Timothy Tregarthen
Saylor URL: />
Saylor.org
69
