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Production Possibilities Frontier: What is Law of increasing opportunity cost? Does the law of increasing opportunity...

Production Possibilities Frontier: What is Law of increasing opportunity cost? Does the law of increasing opportunity cost apply for the production possibility frontier in the case of Rabbits and Berries? If the opportunity cost of Rabbits with respect to Berries(and/or vice versa)was constant, what would the PPF look like?

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Answer #1

Law of increasing opportunity cost means that as we go on producing more of one good after a point we have to sacrifice more and more of the other good to produce more.

Like with rabbits and berries, as we get more rabbits we have to reduce more and more berries to get increase the numbe rof rabbits. If the opportunity cost of rabbits with respect to berries was constant then it will be a straight line for the PPF. With increasing cost it will be a outward bowing curve.  

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