hours to produce 20 barrels of oil and it can allocate the remaining worker hours to produce 60 bushels of

corn.

Country

Oil Production (barrels) Corn Production (bushels)

Saudi Arabia (C)

United States (C')

60

20

Total World Production 80

TABLE 19.3 Production before Trade

10

60

70

The slope of the production possibility frontier illustrates the opportunity cost of producing oil in terms of

corn. Using all its resources, the United States can produce 50 barrels of oil or100 bushels of corn; therefore,

the opportunity cost of one barrel of oil is two bushels of corn—or the slope is 1/2. Thus, in the U.S. production

possibility frontier graph, every increase in oil production of one barrel implies a decrease of two bushels of

corn. Saudi Arabia can produce 100 barrels of oil or25 bushels of corn. The opportunity cost of producing one

barrel of oil is the loss of 1/4 of a bushel of corn that Saudi workers could otherwise have produced. In terms of
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