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

Question

Quizplus · Accepted Answer

This scenario suggests increasing opportunity cost, which means that the more we produce of one good (X), the more we have to give up of another good (Y) per unit of X. This is because resources are not equally efficient in producing both goods. As we produce more of X, we have to allocate less efficient resources to its production, resulting in a higher opportunity cost for producing more units of X.

As We Increase the Production of X,we Find We Must