According to the law of increasing opportunity costs, a. Greater production leads to greater inefficiency. b. Greater production means factor prices rise. c. Greater production of one good requires increasingly larger sacrifices of other goods. d. Higher opportunity costs induce higher output per unit of input.

Question

Nora Velazquez

Business

16 June, 18:50

According to the law of increasing opportunity costs, a. Greater production leads to greater inefficiency. b. Greater production means factor prices rise. c. Greater production of one good requires increasingly larger sacrifices of other goods. d. Higher opportunity costs induce higher output per unit of input.

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Answers (1)

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Dania Bender · Answer 1

Option C, greater production of one good requires increasingly sacrifices of other goods, is correct

Explanation:

The law of increasing opportunity costs states that as a producer increases the quantity manufactured of a commodity, the costs of alternative forgone by choosing to produce the desired product increases.

In other words, if decision is to be made between producing petrol and bitumen and ultimately bitumen is preferred, as more and more bitumen is produced, the quantity of petrol to be given up increases as well.