Consider the production possibilities frontier in the figure shown. As more and more cigars are produced, the opportunity cost of producing more cigars:

Question

Quizplus · Accepted Answer

As more cigars are produced, the opportunity cost of producing more cigars increases. This is because the resources (land, labor, and capital) used to produce cigars are better suited for producing wine. Therefore, the more cigars are produced, the more wine production has to be sacrificed, leading to a higher opportunity cost. The best choice would be to produce at point A, where the economy is producing a combination of cigars and wine that maximizes both production and utility.

Consider the Production Possibilities Frontier in the Figure Shown