If there is increasing opportunity cost, then, when moving downward on a production possibilities frontier, the opportunity cost of the good on the horizontal axis ________ as more of the good is produced.
A) decreases and the PPF gets flatter
B) increases and the PPF gets flatter
C) increases and the PPF gets steeper
D) does not change and the PPF gets steeper
E) decreases and the PPF gets steeper

Question

Quizplus · Accepted Answer

Increasing opportunity cost means that as more of a good is produced, the opportunity cost of producing an additional unit of that good increases. This leads to a steeper production possibilities frontier (PPF). As more of the good on the horizontal axis is produced, the economy needs to give up increasing amounts of the other good, making the opportunity cost higher and creating a steeper PPF.

If There Is Increasing Opportunity Cost, Then, When Moving Downward