Consider the production possibilities frontier in the figure shown.As more and more cigars are produced the opportunity cost of producing more cigars:
A) decreases.
B) stays the same.
C) increases.
D) decreases then increases.

Question

Consider the production possibilities frontier in the figure shown.As more and more cigars are produced the opportunity cost of producing more cigars:
A) decreases. 
B) stays the same. 
C) increases. 
D) decreases then increases.

Quizplus · Accepted Answer

According to the Law of Increasing Opportunity Cost, as the production of one good increases, the opportunity cost of producing that good also increases. Therefore, as more and more cigars are produced, the opportunity cost of producing more cigars will increase, meaning that fewer resources will be available for producing other goods in the economy. The best choice would be to produce at point B or C, where the economy is producing a combination of cigars and other goods that maximizes overall output given the available resources.

Consider the Production Possibilities Frontier in the Figure Shown