As we increase production of X, we must give up production of larger and larger amounts of Y to produce each additional unit of X.Select the best statement.
A)As a result, we should not specialize in the production of X.
B)We must be producing inside the production possibilities frontier.
C)The production possibilities frontier for X and Y is a straight line.
D)This illustrates increasing opportunity cost.
E)Good Y will be more highly regarded by consumers than good X.

Question

Quizplus · Accepted Answer

The statement describes the concept of increasing opportunity cost, where the more we produce of X, the more we have to give up producing Y. This means that the opportunity cost of producing X in terms of Y is increasing, which is a characteristic of a production possibilities frontier with a bowed-out shape. Therefore, the best statement is D.

As We Increase Production of X, We Must Give Up