A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule. If the nation produces more and more tanks, the opportunity cost of each additional tank in terms of autos
A) remains constant.
B) falls.
C) increases.
D) cannot be measured.

Question

A nation can produce two products: tanks and autos. The table below is the nation's production possibilities schedule.  If the nation produces more and more tanks, the opportunity cost of each additional tank in terms of autos
A) remains constant. 
B) falls. 
C) increases. 
D) cannot be measured.

Quizplus · Accepted Answer

As the nation produces more and more tanks, it will have to give up increasingly larger amounts of autos. This means that the opportunity cost of each additional tank in terms of autos is increasing, which is reflected in the decreasing slope of the production possibility frontier. Therefore, the correct choice is C, which states that the opportunity cost of each additional tank in terms of autos increases.

A Nation Can Produce Two Products: Tanks and Autos