QuestionAugust 20, 2025

4. Why do opportunity costs increase as you make more and more butter and fewer guns?

4. Why do opportunity costs increase as you make more and more butter and fewer guns?
4. Why do opportunity costs increase as you make more and more butter and fewer guns?

Solution
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Answer

Opportunity costs increase because resources are not equally efficient in all uses, leading to higher sacrifices when reallocating them. Explanation 1. Define Opportunity Cost Opportunity cost is the value of the next best alternative foregone when a choice is made. 2. Explain Increasing Opportunity Costs As resources are reallocated from producing guns to butter, less efficient resources for butter production are used, increasing opportunity costs. 3. Apply Economic Principle The principle of increasing opportunity costs states that as production shifts towards one good, more of the other good must be sacrificed due to resource specialization and inefficiency.

Explanation

1. Define Opportunity Cost<br /> Opportunity cost is the value of the next best alternative foregone when a choice is made.<br /><br />2. Explain Increasing Opportunity Costs<br /> As resources are reallocated from producing guns to butter, less efficient resources for butter production are used, increasing opportunity costs.<br /><br />3. Apply Economic Principle<br /> The principle of increasing opportunity costs states that as production shifts towards one good, more of the other good must be sacrificed due to resource specialization and inefficiency.
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