Hi Ken,
The TPS is on the throttle body, I believe on the inboard side, closest to the engine. You should be able to get a replacement from www.fcpgroton.com for $40 or so, assuming you are comfortable handling the repair yourself. Otherwise, you may expect to pay $200 for this at the dealer or a little less through an independent Volvo mechanic.
The TPS feeds a signal to the tranny control module (TCM), to help the tranny determine when to shift, so that is where the arrow is probably coming from.
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