Refer to the graph above. Precisely what does the term ?increasing marginal oppo

Question

Refer to the graph above. Precisely what does the term ?increasing marginal opportunity cost? signifies in this graph?

a. It means that increasing the production of aircrafts results in higher automobile production costs, such as the costs of labor and capital to build automobiles.

b. It means that there is a higher opportunity cost of producing either aircrafts or automobiles, so long as the quantity produced of that good is increasing.

c. It means that increasing the production of either aircrafts or automobiles creates more opportunities in the economy.

d. It means that there is a higher opportunity cost of producing either aircrafts or automobiles, so long as the quantity produced of that good is decreasing.

Explanation / Answer

b. It means that there is a higher opportunity cost of producing either aircrafts or automobiles, so long as the quantity produced of that good is increasing. The graph shows number of aircraft carriers produced related to number of automobiles produced. The increase marginal opportunity cost, the company wants to manufacture as many automobiles and aircraft carriers as possible. To do this, they try to find the best combination of automobiles and aircraft carriers.

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