When increasing output, marginal opportunity costs increase because inputs are not equally productive in all activities.

Question

Quizplus · Accepted Answer

As output increases, firms need to allocate their resources and inputs to produce more goods. However, not all inputs are equally productive in all activities. Therefore, as firms produce more output, they need to use less productive inputs, which leads to a higher opportunity cost of producing additional units of output. This is reflected in the increasing marginal opportunity cost of production.

When Increasing Output, Marginal Opportunity Costs Increase Because Inputs Are