Consider a production possibility frontier with jeans on the vertical axis and shoes on the horizontal axis. As a country moves along the frontier closer to the vertical axis,
A) the opportunity cost of producing jeans increases.
B) the opportunity cost of producing shoes increases.
C) there are fewer tradeoffs.
D) inefficient production occurs.
E) the opportunity cost of producing jeans decreases.
The correct answer and explanation is :
The correct answer is:
B) The opportunity cost of producing shoes increases.
Explanation:
A Production Possibility Frontier (PPF) represents the maximum possible output combinations of two goods that an economy can produce given available resources and technology. In this case, the two goods are jeans (vertical axis) and shoes (horizontal axis).
When a country moves closer to the vertical axis, it is producing more jeans and fewer shoes. Because resources are scarce and not equally efficient in producing both goods, shifting more resources toward jeans production means pulling resources away from shoe production.
This movement along the PPF illustrates the concept of opportunity cost, which is the value of the next best alternative foregone. As the country produces more jeans, the resources used to make them were previously used efficiently in shoe production. However, since some resources (like specialized workers or machinery) are better suited for making shoes, reallocating them to jean production results in higher opportunity costs for shoes—more and more shoes must be sacrificed for each additional unit of jeans produced.
This increasing opportunity cost aligns with the law of increasing opportunity costs, which states that as production of one good expands, the opportunity cost of producing additional units of that good increases.
To summarize:
- Moving closer to the vertical axis means producing more jeans and fewer shoes.
- The economy must give up more and more shoes to produce additional jeans.
- This means the opportunity cost of producing shoes increases as more resources shift toward jeans production.
Thus, the correct answer is B).