What does increasing marginal opportunity cost along a production possibility
curve mean?
Answers
Answer:
The marginal opportunity cost is thus the cost of the commodity that is in the opportunity of X and in the terms of an opportunity of Y. Thus the shape of this curve is concave as the increase in the opportunity cost with an increase in the output of the good.
Explanation:
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In the context of production possibility curve(PPC),marginal opportunity cost indicates the rate of substitution between the two goods that a country can produce with a given or limited amount of input endowment.
Explanation:
Opportunity cost refers to sacrificing or giving up one option or choice by availing the other.With regards to PPC,the law of increasing opportunity cost implies that as country increases the production of one good,the opportunity cost of of producing the other good increases.It means that as the country increasingly dedicates or employs more inputs and resources into the production of one particular good,those resources could have been used to produce the other good and are increasingly given up or sacrificed.With production of each additional unit of one good,the resources and inputs are sacrificed which could have been used for producing the other.Therefore,this concept is related to the allocation of resources or factor inputs in the entire production process and combination of the two goods that a country determines.The concept of increasing marginal opportunity also explains the concave shape of the PPC indicating that as the production of one good increases the production of other falls but at a diminishing rate.