The production possibilities curve for Roadway shows the combinations of trucks and boats that it can produce, given the factors of production and technology available to it To maximize the value of total production, Roadway must be operating somewhere along this curve Production at point D implies that Roadway is failing to use its resources fully and efficiently; production at point E is unobtainable We have learned that the absolute value of the slope of a production possibilities curve at any point gives the quantity of the good on the vertical axis that must be given up to produce an additional unit of the good on the horizontal axis It thus gives the opportunity cost of producing another unit of the good on the horizontal axis Figure 17.2 Measuring Opportunity Cost in Roadway The slope of the production possibilities curve at any point is equal to the slope of a line tangent to the curve at that point The absolute value of the slope equals the opportunity cost of increased boat production Moving down and to the right along its production possibilities curve, the opportunity cost of boat production increases; this is an application of the law of increasing opportunity cost Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 889