Refer to the above diagram.The movement down the production possibilities curve from point A to point E suggests that the production of:
A)computers, but not bicycles, is subject to increasing opportunity costs.
B)bicycles, but not computers, is subject to increasing opportunity costs.
C)both bicycles and computers is subject to constant opportunity costs.
D)both bicycles and computers is subject to increasing opportunity costs.

Question

Refer to the above diagram.The movement down the production possibilities curve from point A to point E suggests that the production of:
A)computers, but not bicycles, is subject to increasing opportunity costs. 
B)bicycles, but not computers, is subject to increasing opportunity costs. 
C)both bicycles and computers is subject to constant opportunity costs. 
D)both bicycles and computers is subject to increasing opportunity costs.

Quizplus · Accepted Answer

Moving down the production possibilities curve suggests that resources are being reallocated from the production of one good to the other. The fact that this movement results in a tradeoff for both goods suggests that increasing opportunity costs are at play. Therefore, both bicycles and computers are subject to increasing opportunity costs.

Refer to the Above Diagram