The marginal cost of a good or service
A) graphs as a positively sloped curve, so it cannot be derived from the production possibilities frontier, which is downward sloping.
B) can be derived from the production possibilities frontier.
C) can be calculated from the marginal benefit of that good or service.
D) decreases as more of the good or service is produced.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

The production possibilities frontier shows the maximum output of two goods that can be produced with a given amount of resources. Marginal cost is the additional cost of producing one more unit of a good or service, which can be derived from the production possibilities frontier by comparing the opportunity cost of producing one more unit of a good with the opportunity cost of producing one less unit of the other good. The slope of the production possibilities frontier represents the opportunity cost, and the marginal cost is the slope of a tangent to the frontier at a given point. Therefore, answer B is correct.

The Marginal Cost of a Good or Service