The law of increasing relative costs, depicted by the concavity of the production possibilities frontier, is most closely related to the
A)downward slope of the demand curve.
B)upward slope of the demand curve.
C)downward slope of the supply curve.
D)upward slope of the supply curve.

Question

Quizplus · Accepted Answer

The law of increasing relative costs states that as the production of one good increases, the opportunity cost of producing that good increases, resulting in a concave PPF. This is related to the upward slope of the supply curve because as producers increase the quantity of a good produced, they must incur additional costs (such as hiring more workers or buying more resources) that result in increasing the price of production.

The Law of Increasing Relative Costs, Depicted by the Concavity