As we move along a production possibilities curve and acquire larger and larger amounts of one good (e.g. ,guns),the sacrifices of the alternative good (e.g. ,butter)become larger and larger.This is an illustration of
A)the law of demand.
B)the law of large numbers.
C)the law of supply.
D)decreasing opportunity costs.
E)increasing opportunity costs.

Question

Quizplus · Accepted Answer

This situation illustrates increasing opportunity costs. This is because as we produce more and more of one good, we have to give up more and more of the other good, thus the opportunity cost of producing the good we are getting more of increases. Therefore, the correct answer is E.

As We Move Along a Production Possibilities Curve and Acquire