Which of the following BEST illustrates increasing opportunity costs Available for: $ 29.00 Posted By: kimwood Posted on: 02/22/2016 09:01 PM Tutorial # 00198812 Puchased By: 2 B) production takes time. Unlock to view answer. C) resources lack specialization. By describing this trade-off, the curve demonstrates the concept of opportunity cost. Figure 1 shows an economy at point X and in order to increase the production of capital goods by 10 there is an opportunity cost of 15 units of consumer goods. B) not all resources are equally well suited to produce all goods. the PPF shifts outward. E)all opportunity costs decrease. line does not qualify as a production possibilities frontier because the unattainable production points are too close to the inefficient production points. Figure 1. The PPF illustrates opportunity cost and the law of increasing opportunity cost. According to the law of increasing opportunity cost, as a society produces more and more of a certain good, further production increases involve ever-greater opportunity costs, so that producing the good is associated with greater and greater trade-offs. D) the society be producing at the point of allocative efficiency. This causes the curve to be concave toward the origin. But this time we'll consider opportunity cost that varies along the frontier. Homework Help. The marginal cost of a good is the opportunity cost of producing one more unit of it. D) of inequities in the distribution of income. 100 cars b. As an economy moves along the PPF by reallocating its resources from one activity to another, it produces more of one good but less of the other. Opportunity Cost and the PPF. Q 111 Q 111. Efficiency is illustrated when production occurs along the PPF, and the shape of the PPF illustrates the law of increasing opportunity costs. 2. E) opportunity costs be minimized. as we move along the PPF. 1 points . The production possibility curve portrays the cost of society's choice between two different goods. The geometry of the production possibility frontier flows from its economics. Q4 a) b) The PPF curve illustrates the concept of increasing opportunity costs with its changing slope. Production efficiency means that. Let me write that down, increasing, increasing, O.C. Increasing opportunity costs occur along the production possibilities frontier because: A) of unemployment in the economy. C) in order to produce more of one good decreasing amounts of another good must be sacrificed. So the marginal cost curve, illustrated in Figure 2.2 on the next page, slopes upward. Because of in-creasing opportunity cost, when moving along the production possibilities frontier the marginal cost of an additional unit of a good increases as more is produced. 3.1 PRODUCTION POSSIBILITIES. Increasing opportunity costs are present when the production possibility frontier bulges outwards from the origin. Reallocating scarce resources from one product to another involves an opportunity cost; If we increase our output of consumer goods (i.e. Increasing opportunity cost occurs along a production possibilities frontier because A) resources are not equally productive in all activities. B. production takes time. 26) Increasing opportunity cost while moving along a production possibilities frontier is the result of A) taxes. all opportunity costs decrease. Efficiency is illustrated when production occurs along the PPF, and the shape of the PPF illustrates the law of increasing opportunity costs. Overall you would earn less revenue. School Monroe Community College; Course Title ECON 101; Type. Increasing opportunity costs occur along the PPF because: A) of unemployment in the economy. Uploaded By brigadier1; Pages 55; Ratings 100% (13) 13 out of 13 people found this document helpful. It occurs because society produces more and more of Grains; it must give up increasing amounts of Airplanes due to the fact that resources are specialized. C. increasing wants need to be satisfied. Explain why increasing Opportunity Costs occur and how this is shown in the PPF. 20. D) the fact that resources are not equally productive in alternative uses. The opportunity cost remains the same all along the linear PPF. B) the PPF shifts outward. Furthermore, if resources are different, then the required specialization of resource usage implies that some form of trading occurs in order for each resource owner to consume all (both) goods. Efficiency is illustrated when production occurs along the PPF, and the shape of the PPF illustrates the law of increasing opportunity costs. Let’s go through a table and construction of this type of PPF. Increasing opportunity cost occurs along a production possibilities frontier because. Free. Here's where the curved frontier line comes in. Let's review. They can be used to show the concept of opportunity cost. Increasing costs occur if resources are not equally well suited to the production of Good A and Good B. a. Lesson Summary. The concave shape means that the opportunity cost of attaining more on one good increases as the economy produces more and more of that good. D)all opportunity costs increase. the PPF shifts inward because unemployment occurs. Increasing opportunity costs occur along the PPF because: A) of unemployment in the economy. B) not all resources are equally well suited to produce all goods. Multiple Choice . C) resources lack specialization. It occurs because society produces more and more of Grains; it must give up increasing amounts of Airplanes due to the fact that resources are specialized. Also, the change in each increment for units of goods will be 11, instead of 10. No. all opportunity costs increase. Let's say Econ Isle increases its production of widgets to 5. Increasing opportunity cost as we increase the number of rabbits we're going after. For example, the opportunity cost of a leather jacket at point G would be higher than point B. A PPF with Increasing Opportunity Costs Soda (millions of bottles per month) Tapes (millions per month) FIGURE 2.1 The production possibilities frontier (PPF) b a 0 20 30 40 50 10 20 30 40 50 10 A PPF is illustrated in Figure 2.1. Let's increase widget production in increments of 2 again until only widgets and no gadgets are produced. And you could do it the other way. 500 trucks c. 100 trucks d. 600 trucks 10. A. in order to produce more of one good decreasing amounts of another good must be sacrificed. It shows that opportunity cost varies along the frontier. The first PPF for Jimmy showed the case where we have constant opportunity costs, meaning that the slope doesn’t change, or the PPF is linear. You could say, OK, as we increase-- especially if you did it on a unit basis, if you said every incremental berry or every incremental 100 berries we're going after, but the numbers aren't as easy right over here-- you'll actually see something going the other way. This preview shows page 19 - 21 out of 55 pages. credit by exam that is accepted by over 1,500 colleges and universities. The opportunity cost of moving from producing 400 to 500 cars is ____ trucks. 6. resources are equally productive in both goods. B) not all resources are equally well suited to produce all goods. Efficiency is illustrated when production occurs along the PPF, and the shape of the PPF illustrates the law of increasing opportunity costs. When production is inside the PPF, there is a free lunch. So with that out of the way, which of these would describe a decreasing opportunity cost? We can move to the PPF and get more goods without forgoing either good. Furthermore, if resources are different, then the required specialization of resource usage implies that some form of trading occurs in order for each resource owner to consume all (both) goods. a country moves toward the midpoint along its PPF and can produce more of both goods. Should you go beyond point C to point D? opportunity cost is not a ratio. C) the fact that it is more difficult to use resources efficiently the more society produces. Increasing opportunity cost occurs because a. workers become more productive as they work longer hours increasing opportunity costs. Making more of one good will cost society the opportunity of making more of the other good. Maybe you could imagine a scenario where every incremental rabbit I catch, I get better and better at catching rabbits. This causes the curve to be concave toward the origin. that can be produced in Happyville. Refer to the table above which gives five points on a nations PPF The. more llamas and less grapes (that is, by moving along the PPF toward point C). This change means that the opportunity cost of producing services anywhere along the curve has gone down (because the slope has changed, it is now more steep). Refer to the table above which gives five points on a. 28) Relative to AI, Joe has _____if Joe can produce a good at a lower opportunity cost than AI. You can see from the graph that the opportunity costs are constant as we move along the various points of the PPF. B) firms’ needs to produce profits. This point remains the same. If the opportunity costs were increasing, then we would see the opportunity cost rise as we produced more and more of that specific good. D. resources are not equally productive in all activities. C) a country moves toward the midpoint along its PPF and can produce more of both goods. b) The PPF curve illustrates the concept of increasing opportunity costs with its changing slope. At point C, the opportunity cost of 200 more llamas is 25,000 bushels of grapes. C) resources lack specialization. The people of Econ Isle would like to increase the production of both widgets and gadgets, but the PPF shows that this is not possible. C) the marginal cost of a good equals its marginal benefit but the economy does not need to be producing on its PPF. If you produced another 200 llamas your revenues from llamas would increase by $24,000; however, your revenues from grapes would fall by $25,000. MOVEMENTS ALONG A PPF. The figure above shows Liz's and Joe's production possibilities for Salads and Smoothies. 27) As technology advances, 27) _____ A) the PPF shifts inward because unemployment occurs. Lesson 1: Because resources are scarce, not everyone's wants can be met. B) the economy be producing on the PPF and that the marginal cost of a good equals its marginal benefit. However, as noted previously, almost all PPFs are concave. D) of inequities in the distribution of income. for opportunity cost. B) not all resources are equally well suited to produce all goods. All production possi-bilities frontiers have two characteristics in common: ♦ Production points inside and on the PPF are attain-able. Increasing opportunity costs occur along the PPF because: A) of unemployment in the economy. QUESTION 4. D) increasing wants need to be satisfied. courses that prepare you to earn True or False? A PPF usually shows an economy with capital goods on the y axis and consumer goods on the x axis, as shown in Figure 1. Production Possibility Frontier . Most PPFs are concave, or have a bowed out curve, which signifies increasing opportunity costs. - 21 out of 13 people found this document helpful more society produces 10. 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