If the law of increasing opportunity costs is operable,and currently the opportunity cost of producing the 1,000th unit of good X is 0.5Y,then the opportunity cost of producing the 2,001st unit of good is X is most likely to be
A) less than 0.5Y.
B) more than 0.5Y but less than 2Y.
C) more than 0.5Y.
D) less than 0.5Y but more than zero.
E) none of the above

Question

Quizplus · Accepted Answer

The law of increasing opportunity costs states that as production of one good increases, the opportunity cost of producing additional units (measured in terms of the foregone opportunity to produce another good) also increases. Therefore, as we move from producing the 1,000th unit of X to the 2,001st unit, the opportunity cost of producing that additional unit of X is likely to be greater than 0.5Y. This is because as we produce more units of X, we will have to give up increasingly larger amounts of good Y, leading to a higher opportunity cost. Option C is the only choice that suggests a higher opportunity cost than 0.5Y.

If the Law of Increasing Opportunity Costs Is Operable,and Currently