The law of increasing opportunity costs states that:

Question

Quizplus · Accepted Answer

The law of increasing opportunity costs states that as the production of one good increases, the opportunity cost of producing an additional unit of that good increases, meaning that greater and greater sacrifices of the other good must be made in order to produce additional units of the first good. This is because resources are not perfectly adaptable to producing both goods, so as more resources are shifted to one good, the resources best suited for producing the other good must be sacrificed, resulting in a higher opportunity cost for producing more of the initial good. Option A is incorrect because costs do not decrease for the other good, but instead increase due to the principle of scarcity. Option B is incorrect because the law of increasing opportunity cost is not solely related to wages and resource costs. Option D is also incorrect because as production increases, the production of the good does not become easier due to diminishing marginal returns.

The Law of Increasing Opportunity Costs States That