Questions: 29 of 40 Concepts completed (i) Multiple Choice Question In the real world, the opportunity cost increases as production increases, because: the cost of producing more of one good is the forgone production of another good. some resources are better suited for producing some goods or services than others. higher production levels are always associated with higher costs. prices rise over time, so costs will increase.

29 of 40 Concepts completed
(i)

Multiple Choice Question
In the real world, the opportunity cost increases as production increases, because:
the cost of producing more of one good is the forgone production of another good.
some resources are better suited for producing some goods or services than others.
higher production levels are always associated with higher costs.
prices rise over time, so costs will increase.
Transcript text: 29 of 40 Concepts completed (i) Multiple Choice Question In the real world, the opportunity cost increases as production increases, because: the cost of producing more of one good is the forgone production of another good. some resources are better suited for producing some goods or services than others. higher production levels are always associated with higher costs. prices rise over time, so costs will increase.
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Solution

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Answer

The answer is: some resources are better suited for producing some goods or services than others.

Explanation
Option 1: the cost of producing more of one good is the forgone production of another good.

This statement describes the basic concept of opportunity cost, but it does not explain why opportunity cost increases as production increases. It simply states what opportunity cost is.

Option 2: some resources are better suited for producing some goods or services than others.

This is the correct explanation. As production of a particular good increases, resources that are less suited for its production must be used, leading to higher opportunity costs. This is due to the principle of increasing opportunity costs, which states that as you produce more of one good, you have to give up increasingly larger amounts of another good because resources are not perfectly adaptable to all uses.

Option 3: higher production levels are always associated with higher costs.

While higher production levels can lead to higher costs, this statement does not specifically address the concept of opportunity cost or why it increases.

Option 4: prices rise over time, so costs will increase.

This statement refers to inflation and general price increases over time, which is not directly related to the concept of opportunity cost increasing with production.

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