MIcro-Econ Ch.2 Calculations & Slope Mechanics

Slope of the PPF Formula

Equal to the opportunity cost of producing one more unit of the good on the horizontal axis (Good X), calculated as $\frac{\text{Amount of Good Y Given Up}}{\text{Amount of Good X Gained}}$. (Note: $\frac{\Delta Y}{\Delta X}$ formula added for mathematical clarity).

Inverse Opportunity Cost Rule

The opportunity cost of Good Y equals $\frac{1}{\text{Opportunity Cost of Good X}}$ when moving between the same two points on a PPF.

Uniland Math: Moving from 0 to 600 Cars (Points A to B)

To get 600 cars, give up 800 computers ($3000 - 2200$). Opportunity cost per car $= \frac{800}{600} = 1.33$ computers.

Uniland Math: Moving from 600 to 700 Cars (Points B to C)

To get 100 cars, give up 200 computers ($2200 - 2000$). Opportunity cost per car $= \frac{200}{100} = 2.00$ computers.

Uniland Math: Moving from 700 to 1000 Cars (Points C to D)

To get 300 cars, give up 2000 computers ($2000 - 0$). Opportunity cost per car $= \frac{2000}{300} = 6.67$ computers.

Uniland Math: Moving from 2000 to 2200 Computers

To get 200 computers, give up 100 cars ($700 - 600$). Opportunity cost per computer $= \frac{100}{200} = 0.5$ cars, which is the exact inverse of 2 cars ($\frac{1}{2} = 0.5$).