Using your own words, describe the law of increasing opportunity costs. Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier.

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Using your own words, describe the law of increasing opportunity costs.  Be sure to explain why this phenomenon occurs and how it helps to contribute to the shape of the production possibilities frontier.


ANS:
People (and other resources) have varying abilities when it comes to producing a given product which results in a non-constant opportunity cost. Those resources that are better suited at making the product will have a lower opportunity cost than those who are less-suited.  As more of a product is produced, it becomes increasingly more difficult to find resources that are well-suited to producing that product.  Therefore, the opportunity cost of producing more units grows as additional units are produced. and the PPF becomes steeper and steeper.  The result is that the PPF is typically bowed-outward due to the law of increasing opportunity costs.

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