Constant vs Increasing Opportunity Cost

Question 1

Opportunity Cost

Answer 1

The Trade off / what we give up.

Question 2

Increasing Opp. Cost

Answer 2

When you increase the production of one good, the opportunity cost to produce the other good will increase.

Question 3

Increasing Opp. Cost Example

Answer 3

If you give more education, you give up a little of Healthcare.

Question 4

Constant Opp. Cost

Answer 4

When the opportunity cost stays the same as you increase your production of one good.

Question 5

Constant Opp. Example

Answer 5

The need to fill a position with someone with experience and skills (nothing changes)

Question 6

Budget Constraint

Answer 6

All possible combinations of goods that someone can afford, given the price of goods, when all income is spent.

Question 7

Law of Diminishing Marginal Utility

Answer 7

Receive too much of something, lose interest/value

Question 8

Law of Diminishing Returns

Answer 8

Additional increments of resources are added to production, the marginal benefits will decline (the maximum capacity) ex. working too much

Question 9

Production Possibilties Frontier

Answer 9

A diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available. ex. Healthcare & Education