Question

As this society moves up its production possibility​ frontier, producing more and more units of​ donuts, the opportunity cost of producing beer A. could decrease or increase depending on the technology. B. decreases. C. increases. D. remains constant.

Answer 1

Answer:

C. increases.                        

Explanation:

             When there are more than one choices or alternatives and we choose one alternative among them, then the loss of the potential gain associated with the other alternatives when one choice is taken is known as opportunity cost.

            A production possibility​ frontier is a curve or graph that shows the various amounts of any two products which can be produced when both the products depends on same finite source.

            In the context, a society produces two products namely, beer and donuts. As the production possibility​ frontier moves up, producing more donuts by the society increases the opportunity cost for producing beer as the society produces both donuts as well as beer.

Hence the correct option is (C).