Production possibilities (alternatives) Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:
A)the amount of consumer goods which must be sacrificed to get more capital goods diminishes beyond a point.
B)larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.
C)the production possibilities data would graph as a straight downsloping line.
D)the economy's resources are presumed not to be scarce.

Question

Production possibilities (alternatives)  Refer to the above table.For these data the law of increasing opportunity costs is reflected in the fact that:
A)the amount of consumer goods which must be sacrificed to get more capital goods diminishes beyond a point. 
B)larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods. 
C)the production possibilities data would graph as a straight downsloping line. 
D)the economy's resources are presumed not to be scarce.

Quizplus · Accepted Answer

The law of increasing opportunity costs states that as production of one good increases, the opportunity cost in terms of other goods forgone increases as well. In this case, as the economy produces more and more capital goods, it must sacrifice increasing amounts of consumer goods, reflecting the increasing opportunity cost of producing capital goods. Therefore, the correct choice is B, larger and larger amounts of capital goods must be sacrificed to get additional units of consumer goods.

Production Possibilities (Alternatives) Refer to the Above Table