Increasing opportunity cost while moving along a production possibilities frontier is the result of
A) the fact that it is more difficult to use resources efficiently the more society produces.
B) taxes.
C) the fact that resources are not equally productive in alternative uses.
D) firmsʹ needs to produce profits.

Question

Quizplus · Accepted Answer

The increasing opportunity cost while moving along a production possibilities frontier is due to the fact that resources are not equally productive in alternative uses. As we produce more of one good, we have to give up increasingly larger amounts of the other good, as resources are shifted from the production of the first good to the production of the second good. This is because resources may be specialized for the production of one good and may not be equally productive if used for the production of another good. Therefore, the opportunity cost of producing more of one good increases as we produce more of that good.

Increasing Opportunity Cost While Moving Along a Production Possibilities Frontier