Q uick Quiz

1. Production possibilities curve ABCDE is bowed out from the origin (concave to the origin) because:

a. the marginal benefit of pizzas declines as more pizzas are consumed.

b. the curve gets steeper as we move from Eto A.

c. it reflects the law of increasing opportunity costs.

d. resources are scarce.

2. The marginal opportunity cost of the second unit of pizzas is:

a. 2 units of robots.

b. 3 units of robots.

c. 7 units of robots.

d. 9 units of robots.

3. The total opportunity cost of 7 units of robots is:

b. 2 units of pizza.

c. 3 units of pizza.

d. 4 units of pizza.

4. All points on this production possibilities curve necessarily represent:

a. allocative efficiency.

b. less than full use of resources.

c. unattainable levels of output.

d. productive efficiency.


34 Part One • An Introduction to Economics and the Economy law of

INEREA5INg oppoRtunitY costs As the production of a good increases, the opportunity cost of producing an additional unit rises.

for the first unit of pizza lus 2 units of robots for the second unit of pizza lus units of robots for the third unit of pizza).

Our example illustrates the law of increasing opportunity costs: The more of a product that is produced, the greater is its opportunity cost ("marginal" being implied).

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