-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact
A) indicates that good Y is more capital intensive than good X.
B) illustrates decreasing opportunity cost.
C) illustrates increasing opportunity cost.
D) indicates that good X is more capital intensive than good Y.

Question

-Refer to the production possibilities frontier in the figure above. More of good X must be given up per unit of good Y gained when moving from point b to point a than when moving from point c to point b. This fact
A) indicates that good Y is more capital intensive than good X. 
B) illustrates decreasing opportunity cost. 
C) illustrates increasing opportunity cost. 
D) indicates that good X is more capital intensive than good Y.

Quizplus · Accepted Answer

The production possibilities frontier typically illustrates increasing opportunity costs, meaning that as you produce more of one good, you have to give up increasingly larger amounts of the other good. This is evident when moving from point b to point a compared to moving from point c to point b.

-Refer to the Production Possibilities Frontier in the Figure Above