According to the principle of increasing opportunity cost, expanding production requires using resources in which order?
A) In random order.
B) Starting with the resource with the highest opportunity cost and progressing to the lower opportunity cost resources.
C) Starting with the resource closest to the average opportunity cost, then progressing to higher opportunity cost resources.
D) Starting with the resource with the lowest opportunity cost and proceeding to the higher opportunity cost resources.

Question

Quizplus · Accepted Answer

According to the principle of increasing opportunity cost, expanding production requires using resources in order of increasing opportunity cost. This means starting with the resources with the lowest opportunity cost and proceeding to the higher opportunity cost resources. This is because as more and more of a certain resource is used, the opportunity cost of using that resource increases, making it more expensive to produce additional units of output. Therefore, it makes the most sense to use the lowest cost resources first, and then move on to higher cost resources as production expands.

According to the Principle of Increasing Opportunity Cost, Expanding Production