-Exhibit B-3 shows an economy's production possibilities table. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units ofconsumption goods ________ because of __________.

Question

Quizplus · Accepted Answer

The correct answer is C) increases; the law of increasing costs. This is because as more capital goods are produced, resources that are not as well suited for producing capital goods are used, leading to an increase in the opportunity cost of producing additional units of capital goods. This phenomenon is explained by the law of increasing costs, which states that as production of one good increases, the opportunity cost of producing an additional unit of that good also increases, due to factors such as the reallocation of resources that are less efficient in the production of the increased good.

-Exhibit B-3 Shows an Economy's Production Possibilities Table