What does increasing marginal opportunity costs mean in the context of a production possibilities frontier (PPF)?

• A. Producing each additional unit of a good requires giving up increasingly larger amounts of another good.
• B. The opportunity cost of producing a good remains constant as more of it is produced.
• C. Resources are perfectly adaptable to the production of all goods.
• D. The PPF is a straight line, indicating constant trade-offs between goods.

Answer: (A)

Verified step by step guidance

1. Understand that the Production Possibilities Frontier (PPF) represents the maximum combinations of two goods that an economy can produce given its resources and technology.
2. Recognize that 'marginal opportunity cost' refers to the amount of one good that must be sacrificed to produce an additional unit of another good.
3. Increasing marginal opportunity costs mean that as you produce more of one good, you have to give up larger and larger amounts of the other good, reflecting that resources are not equally efficient in producing both goods.
4. This concept is visually represented by a PPF that is concave (bowed out) from the origin, showing increasing trade-offs rather than a straight line.
5. Therefore, increasing marginal opportunity costs imply that the opportunity cost of producing each additional unit of a good rises as production of that good increases.