As we increase the production of X, we find we must give up larger and larger amounts of Y per unit of X. Select the best statement.
A)This illustrates increasing opportunity cost.
B)As a result, we should not specialize in the production of X.
C)The production possibilities frontier for X and Y is a straight line.
D)Good Y will be more highly regarded by consumers than good X.
E)We must be producing inside the production possibilities frontier.

Question

Quizplus · Accepted Answer

Increasing opportunity cost means that as we produce more of one good, we must give up more of another good. In this scenario, as we increase production of X, we give up more and more units of Y per unit of X, which illustrates increasing opportunity cost.

As We Increase the Production of X, We Find We