Unit 1, Question 5- Law of Increasing Opportunity Cost

The video tutorial explains the difference between bowed out and straight line production possibilities curves. It uses examples of cars and pizza to illustrate increasing opportunity costs, where resources are not easily adaptable, leading to a bowed out curve. Conversely, it uses cars and trucks to demonstrate constant opportunity costs, where resources are easily adaptable, resulting in a straight line curve.

What is the main difference between a bowed out production possibilities curve and a straight line curve?

• A straight line curve represents decreasing opportunity cost.

• A bowed out curve represents increasing opportunity cost.

• A straight line curve represents increasing opportunity cost.

• A bowed out curve represents constant opportunity cost.

In the context of cars and pizza, why are the resources not easily adaptable?

• Because they require completely different resources.

• Because they require the same type of resources.

• Because they have the same production process.

• Because they are produced in the same factory.

What does the law of increasing opportunity cost imply?

• Producing more of one good requires giving up more of another good.

• Producing more of one good does not affect the production of another good.

• Producing more of one good requires giving up the same amount of another good.

• Producing more of one good requires giving up less of another good.

How does the opportunity cost behave in a constant opportunity cost scenario?

• It fluctuates randomly as production increases.

• It decreases as production increases.

• It increases as production increases.

• It remains the same as production increases.

Why are resources easily adaptable in the production of cars and trucks?

• Because they require similar types of resources.

• Because they have different production processes.

• Because they are produced in different factories.

• Because they require different types of resources.