points on the PPF. The second major difference is the absence of specific numbers on the axes of the PPF. There are

no specific numbers because we do not know the exact amount of resources this imaginary economy has, nor do we

know how many resources it takes to produce healthcare and how many resources it takes to produce education. If

this were a real world example, that data would be available.

Whether or not we have specific numbers, conceptually we can measure the opportunity cost of additional

education as society moves from point B to point C on the PPF. We measure the additional education by the

horizontal distance between B and C. The foregone healthcare is given by the vertical distance between B and C. The

slope of the PPF between B and C is (approximately) the vertical distance (the “rise”) over the horizontal distance

(the “run”). This is the opportunity cost of the additional education.

The PPF and the Law of Increasing Opportunity Cost
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