Alex must prepare for exams in both biology and economics this week. Assume that the production possibilities curve showing the trade-off between exam scores in biology and economics is concave toward the origin. As Alex moves along the curve spending more of his time studying for economics, what is the effect on the opportunity cost of an hour of preparation for economics?

Question

Quizplus · Accepted Answer

The concave shape of the production possibilities curve indicates increasing opportunity cost as more resources are devoted to one activity, in this case studying for economics. Therefore, as Alex spends more time studying for economics, the opportunity cost of an hour of preparation for economics increases.

Alex Must Prepare for Exams in Both Biology and Economics