Because resources are not perfectly adaptable to the production of both good A and good B,
A)the opportunity cost of A increases as production of A increases
B)the opportunity cost of A decreases as production of A increases
C)it is impossible for the economy to produce both A and B
D)the opportunity cost of A is constant
E)the opportunity cost of B is constant

Question

Quizplus · Accepted Answer

The concept of opportunity cost implies that as production of a good increases, the opportunity cost of producing an additional unit of that good increases. This is because resources are not perfectly adaptable to the production of both goods, meaning that producing more of one good requires giving up some production of the other good. As production of good A increases, more and more resources that are better suited for the production of good B must be used to produce each additional unit of A, thus increasing the opportunity cost of A.

Because Resources Are Not Perfectly Adaptable to the Production of Both