The proposition that states that as output increases for one good in an economy that is on its production possibilities curve, the cost of additional units of the good on the horizontal axis will be greater and greater is the:
A) law of absolute advantage.
B) law of increasing opportunity cost.
C) law of policy ineffectiveness.
D) law of demand.
Ans: B) law of increasing opportunity cost.
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If two goods are complements, their cross elasticity of demand will normally be
A. zero. B. a negative number. C. a positive number. D. infinity.
Refer to Figure 4-2. What area represents producer surplus at a price of P1?
A) A + C B) A + C + E C) C D) C + E
Withholding of the federal income tax _____
a. was first used during the civil war b. was first used during World War I c. was first used during World War II d. was first used after World War II
The opportunity cost of capital is:
a. the cost of labor inputs required to operate that capital. b. the cost of raw materials necessary to put that capital to work. c. the payment necessary to keep that capital from moving to an alternative use. d. the costs of maintenance necessary to keep that capital operating. e. the cost of hiring more units of capital to generate additional units of output.