Increasing opportunity cost can arise if ________.
A) there are economies of scale in production
B) marginal costs of production are constant
C) production of the good is characterized by diminishing returns
D) the production possibility curve is linear

Question

Quizplus · Accepted Answer

Diminishing returns means that as more and more of a certain input (such as labor or capital) is added to the production process, the marginal product of that input will eventually decrease. This means that in order to produce more of a certain good, we must sacrifice increasing amounts of other goods, leading to increasing opportunity costs.

Increasing Opportunity Cost Can Arise If ________