Why does the law of increasing opportunity cost occur quizlet?
the law of increasing opportunity costs is driven by the fact that economic resources are not completely adaptable to alternative uses. To get more of one product, resources whose productivity in another product is relatively great will be needed.
What is the main effect of increasing opportunity costs?
Terms in this set (7) As production of a good increases, the opportunity cost of producing an additional unit rises. What explains the bow shape of PPC? Law increasing opportunity cost, all resources are not equally suited to producing both goods.
Why do opportunity costs occur?
Opportunity costs represent the potential benefits an individual, investor, or business misses out on when choosing one alternative over another. Understanding the potential missed opportunities foregone by choosing one investment over another allows for better decision-making.
Why do opportunity costs increase as society produces more of a good?
Why do opportunity costs increase as society produces more of a good? As society produces more of a good, ever- increasing quantities of other goods and services must be sacrificed or given up. This occurs mostly because there is difficulty experienced in moving resources from one industry to another.
How do you know if opportunity cost is increasing?
When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is concave (bowed out), opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
Which statement is an economic rationale for the law of increasing opportunity cost?
Which statement is an economic rationale for the law of increasing opportunity cost? Many economic resources are better at producing one product than another.
What is opportunity cost give example?
When economists refer to the “ opportunity cost ” of a resource, they mean the value of the next-highest-valued alternative use of that resource. If, for example, you spend time and money going to a movie, you cannot spend that time at home reading a book, and you can’t spend the money on something else.
What is the opportunity cost of a decision?
What Is Opportunity Cost? The opportunity cost (also called an implicit cost) of a decision is the value of what you will lose or miss out on when choosing one possibility over another.
What is a real life example of opportunity cost?
Examples of Opportunity Cost. Someone gives up going to see a movie to study for a test in order to get a good grade. The opportunity cost is the cost of the movie and the enjoyment of seeing it. At the ice cream parlor, you have to choose between rocky road and strawberry.
Can opportunity cost zero?
In general, opportunity cost of a resource is zero only when there is general unemployment of resources, including manpower. If there is unemployment of labour, but no idle equipment, it would be possible to build more hospitals by utilising the surplus labour.
Which best defines opportunity cost?
Opportunity cost is an economics term that refers to the value of what you have to give up in order to choose something else. In a nutshell, it’s a value of the road not taken.
What is opportunity cost and why does it vary with circumstances?
What is opportunity cost and why does it vary with circumstances? Opportunity cost is the highest-valued alternative that must be given up to engage in an activity. It varies because it depends on your alternatives. Your opportunity cost is the value of the best alternative you gave up.
What is the relationship between scarcity choice and opportunity cost?
Whenever a choice is made, something is given up. The opportunity cost of a choice is the value of the best alternative given up. Scarcity is the condition of not being able to have all of the goods and services one wants.
How does a PPC show the law of increasing opportunity cost?
The Production Possibilities Curve ( PPC ) is a model that captures scarcity and the opportunity costs of choices when faced with the possibility of producing two goods or services. The bowed out shape of the PPC in Figure 1 indicates that there are increasing opportunity costs of production.