Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure. The Principle of Increasing Opportunity Cost is reflected in the fact that the opportunity cost going from 70 to 80 in economics is:
A)lower than the opportunity cost of going from 80 to 90 in economics.
B)higher than the opportunity cost of going from 80 to 90 in economics.
C)lower than the opportunity cost of going from 80 to 90 in physics.
D)the same as the opportunity cost of going from 70 to 80 in physics.

Question

Moe divides his time between studying Physics and studying Economics. His production possibilities curve for his final grade in each class is shown in the accompanying figure.  The Principle of Increasing Opportunity Cost is reflected in the fact that the opportunity cost going from 70 to 80 in economics is:
A)lower than the opportunity cost of going from 80 to 90 in economics. 
B)higher than the opportunity cost of going from 80 to 90 in economics. 
C)lower than the opportunity cost of going from 80 to 90 in physics. 
D)the same as the opportunity cost of going from 70 to 80 in physics.

Quizplus · Accepted Answer

An implication of the Principle of Increasing Opportunity Cost is that as we produce more of a good, the opportunity cost of producing each additional unit of that good increases. In this context, this implies that as Moe's grade in economics increases, the opportunity cost of each additional point increases. This is reflected in the fact that the opportunity cost of going from 70 to 80 in economics is only 10 points in physics, while the opportunity cost of going from 80 to 90 in economics is 30 points in physics.

Moe Divides His Time Between Studying Physics and Studying Economics