The opportunity cost of a good increases as more of it is produced because
A) there is no such thing as a free lunch.
B) resources are not equally productive in all activities.
C) producing more of a good requires additional resources.
D) the number of forgone alternatives also increases.
E) people want the good less as more is produced.
The correct answer and explanation is :
The correct answer is:
B) resources are not equally productive in all activities.
Explanation:
The concept of opportunity cost refers to the value of the next best alternative foregone when a decision is made to allocate resources (such as time, money, or labor) to one option rather than another. In the context of production, opportunity cost increases as more of a good is produced due to the principle known as increasing opportunity costs. This phenomenon occurs because resources are not equally well-suited for the production of all goods.
When production of a good is ramped up, the resources (such as labor, land, or capital) that are best suited for producing that good are used first. However, as production increases, less ideal resources are redirected from other uses to help produce more of the good. These less-suitable resources are often less efficient in the production process, which means that the additional amount of the good produced comes at a higher cost in terms of the resources sacrificed.
This is a direct result of the fact that not all resources are perfectly adaptable or equally productive in all industries or sectors. For instance, a factory designed to make cars may have workers who are highly skilled at assembling cars, but those same workers might be much less effective at assembling bicycles. As you reallocate workers or machines to bicycle production (increasing bicycle production), you may face a situation where the opportunity cost of producing more bicycles—such as the number of cars that could have been produced with those resources—becomes higher.
Thus, the opportunity cost increases as more of the good is produced because less efficient resources are employed in the production process, which leads to a greater trade-off between producing that good and the alternatives that must be forgone.
In conclusion, the increase in opportunity cost is due to the non-equivalence of resources across different activities, making option B the correct answer.