What does the law of increasing opportunity costs state about movements along a production possibilities curve (PPC)?

Introduction / Context:
The law of increasing opportunity costs is a key idea in introductory economics and is closely tied to the shape of the production possibilities curve, or PPC. The PPC illustrates the maximum possible combinations of two goods that an economy can produce using available resources and technology. This question asks which statement correctly summarises the law of increasing opportunity costs in terms of movements along the PPC.

Given Data / Assumptions:

• We are dealing with a typical bowed out or concave PPC, not a straight line.
• The PPC shows trade offs between the production of two goods.
• Options describe different possible relationships between production of one good and sacrifices of the other.
• The law of increasing opportunity costs states that as you produce more of one good, the opportunity cost of producing yet more of it increases.
• We assume resources are not perfectly adaptable between the two goods.

Concept / Approach:
Opportunity cost is what you give up in order to get something else. When resources are specialised, reallocating them from one good to another becomes less efficient as you move further along the PPC. As a result, producing extra units of one good requires giving up increasingly larger amounts of the other good. This makes the PPC concave to the origin and leads to the law of increasing opportunity costs. Therefore, we should choose the statement that explicitly mentions larger and larger sacrifices of the other good as production of one good increases.

Step-by-Step Solution:
Step 1: Recall that the law of increasing opportunity costs applies to a bowed out PPC, where resources are not perfectly adaptable between two goods. Step 2: Understand that moving along the PPC to produce more of good A requires shifting resources away from good B. Step 3: Recognise that as more and more resources are transferred, the cost in terms of forgone units of good B rises because resources that are less suited for producing good A are being used. Step 4: Look for the option that states this pattern directly, namely that increases in the production of one good require larger and larger sacrifices of the other good. Step 5: Select option d as it matches the textbook definition of the law of increasing opportunity costs.

Verification / Alternative check:
A common graphical explanation is that the PPC is concave to the origin due to increasing opportunity costs. When you move from one point to another along the curve, the slope becomes steeper, which means the economy must give up more of one good to gain an additional unit of the other good. This visual understanding aligns exactly with option d. The other options talk about wage increases, costs first increasing and then decreasing, or production becoming easier, none of which correspond to the standard explanation of the law of increasing opportunity costs.

Why Other Options Are Wrong:
Along a PPC, increases in the production of one good make the production of that good easier and easier: This is the opposite of the law of increasing opportunity costs and might fit a case where opportunity costs are decreasing, which is not normal for specialised resources. Increases in wages cause increases in the costs of production: While true in some contexts, this describes wage cost relationships, not the specific law of increasing opportunity costs along a PPC. Costs of production increase and then decrease: This describes a different pattern and does not focus on the trade off between two goods along a PPC. Any blank option: It does not give any explanation and is irrelevant.

Common Pitfalls:
Students sometimes mix up the law of increasing opportunity costs with other cost concepts like diminishing marginal returns or average cost behaviour. Another common mistake is to think that producing more of a good should always become easier due to learning effects, forgetting that the PPC framework assumes a fixed technology and a reallocation of scarce resources. Remembering the shape of the PPC and focusing on the trade off between two goods helps keep the meaning of increasing opportunity costs clear.

Final Answer:
The law of increasing opportunity costs states that along a production possibilities curve, increases in the production of one good require larger and larger sacrifices of the other good.