Consider the production possibilities frontier in the figure shown. The opportunity cost of cars between points B and C is:

Question

Quizplus · Accepted Answer

According to the principle of increasing opportunity cost, as more resources are devoted to producing a good, the opportunity cost of producing that good increases. Moving from point A to point B, the opportunity cost of cars decreases because fewer resources are devoted to producing cars and more are devoted to producing computers. However, moving from point B to point C, the opportunity cost of cars increases because more and more resources have to be diverted from producing computers to producing cars, resulting in a higher opportunity cost. Therefore, the opportunity cost of cars between points B and C is greater than the opportunity cost of cars between points A and B.

Consider the Production Possibilities Frontier in the Figure Shown