The law of increasing opportunity cost means that:
A) higher wages, rents, and interest will increase opportunity costs.
B) opportunity cost will decrease the more you decide to produce more of one good along a production possibilities curve.
C) opportunity cost increases when you produce more of one good while moving along a production possibilities curve.
D) costs of production decrease at first, but then eventually rise.

Question

Quizplus · Accepted Answer

The law of increasing opportunity cost states that in order to produce more of one good, you must give up increasing amounts of the other good. As you move along the production possibilities curve, the opportunity cost of producing the second good increases because resources that are better suited for producing the first good are being used up. Therefore, answer C is correct. Options A and D are incorrect because they do not relate to the law of increasing opportunity cost. Option B is also incorrect because the opportunity cost will actually increase as you decide to produce more of one good along the production possibilities curve.

The Law of Increasing Opportunity Cost Means That