Figure 17.2 "Measuring Opportunity Cost in Roadway" shows the opportunity cost of producing boats at points A, B, and C Recall that the slope of a curve at any point is equal to the slope of a line drawn tangent to the curve at that point The slope of a line tangent to the production possibilities curve at point B, for example, is −1 The opportunity cost of producing one more boat is thus one truck As the law of increasing opportunity costs predicts, in order to produce more boats, Roadway must give up more and more trucks for each additional boat Roadway’s opportunity cost of producing boats increases as we travel down and to the right on its production possibilities curve Comparative Advantage People participate in international trade because they make themselves better off by doing so In this section we will find that countries that participate in international trade are able to consume more of all goods and services than they could consume while producing in isolation from the rest of the world Suppose the world consists of two countries, Roadway and Seaside Their production possibilities curves are given in Figure 17.3 "Comparative Advantage in Roadway and Seaside" Roadway’s production possibilities curve in Panel (a) is the same as the one in Figure 17.1 "Roadway’s Production Possibilities Curve" and Figure 17.2 "Measuring Opportunity Cost in Roadway" Seaside’s curve is given in Panel (b) Attributed to Libby Rittenberg and Timothy Tregarthen Saylor URL: http://www.saylor.org/books/ Saylor.org 890