Law of Increasing Opportunity Cost

As an economy increases its production of any good along its PPF, the cost of obtaining an additional unit of the good (in terms of other goods forgone) will be increasing

• The law of increasing opportunity cost is responsible for the bowed out shape of the PPF.

• Increasing opportunity cost arises because not all of the economy’s resources are equally well-suited to the production of a single good, e.g. Cows are not very useful for making guns.

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