Along a concave production possibility frontier,the per-unit opportunity cost of increasing output typically:
A)increasing because specializing in the production of just one good is irrational.
B)decreasing because resources are difficult to move from one sector to another.
C)increasing because some resources are better-suited to producing one good than to the other.
D)decreasing because resource productivity increases naturally over time.

Question

Quizplus · Accepted Answer

Along a concave production possibility frontier, the increasing opportunity cost of producing an additional unit of a good occurs because some resources are better suited to producing one good than the other. This means that as we produce more of one good, we need to divert resources away from the other good, which were particularly efficient at producing it initially. As the shift of resources continues, those resources that are not particularly suitable for producing the chosen good will become overworked, and the opportunity cost of producing one good over another will increase.

Along a Concave Production Possibility Frontier,the Per-Unit Opportunity Cost of Increasing