If production involves increasing opportunity cost, then moving nearer the horizontal axis will increase the opportunity cost of
A)the good that is shown on the horizontal axis.
B)the good that is shown on the vertical axis.
C)both of the goods shown on the axes.
D)neither of the goods shown on the axes.

Question

Quizplus · Accepted Answer

Moving nearer the horizontal axis means producing more of the good shown on the horizontal axis and less of the good shown on the vertical axis. This increase in production of the good on the horizontal axis leads to an increase in the opportunity cost of producing that good, as resources must be shifted away from the production of the other good. Thus, the opportunity cost of the good shown on the horizontal axis will increase. The opportunity cost of the good shown on the vertical axis may or may not increase, depending on the specific production possibilities curve and the slope of the curve.

If Production Involves Increasing Opportunity Cost, Then Moving Nearer the Horizontal