In the context of marginal analysis, what does increasing marginal opportunity costs mean?

• A. Producing each additional unit of a good requires giving up increasingly more of another good.
• B. Marginal opportunity costs are unrelated to the production of goods.
• C. Producing more of a good leads to decreasing opportunity costs for other goods.
• D. The opportunity cost of producing a good remains constant as output increases.

Answer: (A)

Verified step by step guidance

1. Understand the concept of opportunity cost: It refers to the value of the next best alternative foregone when making a choice.
2. Recognize that marginal opportunity cost focuses on the cost of producing one additional unit of a good, measured in terms of the amount of another good that must be given up.
3. Interpret increasing marginal opportunity costs as a situation where producing each additional unit of a good requires sacrificing more and more of another good, reflecting the idea that resources are not perfectly adaptable to the production of all goods.
4. Contrast this with constant or decreasing marginal opportunity costs, where the amount of the other good given up remains the same or decreases as production increases.
5. Conclude that increasing marginal opportunity costs imply a bowed-out (concave) production possibility frontier, illustrating that resources become less efficient as production shifts toward one good.