constant opportunity cost graph

Under what conditions will a country experience constant or increasing costs? Average Costs (Per Unit Cost): can be used to compare to product price TFC AFC Q = TVC AVC Q = TC ATC Q = (or AFC + AVC) Marginal Costs: the extra or additional cost of producing one more unit of output; these are the costs in which the firm exercises the most control TC MC Q D = D Essential Graph: Opportunity costs and the law of increasing opportunity costs are illustrated by a production possibility frontier (PPF) or a production possibility curve (never a straight line). For example, the opportunity cost of a leather jacket at point G would be higher than point B. The graph on the left shows increasing opportunity cost because as you move from point A to B you give up 10 pizzas but as you move from point B to C you give up 30 pizzas. FEEDBACK: If resources are perfectly adaptable for use in the production of all goods in the economy, this PPF will be drawn as a downward-sloping straight line because the opportunity costs will be constant. If the opportunity costs were increasing, then we would see the opportunity cost rise as we produced more and more of that specific good. The graph on the left shows increasing opportunity cost and the graph on the right shows constant opportunity cost. Next, draw a PPF that is based on the data in the table Illustrate increasing opportunity costs (for one good) in a table similar to the one in Exhibit 2(a). You can see from the graph that the opportunity costs are constant as we move along the various points of the PPF. PPCs for increasing, decreasing and constant opportunity cost Production Possibilities Curve as a model of a country's economy Lesson summary: Opportunity cost and the PPC This graph considers the factors of production (and assumes full employment), charting the ideal production level of two products competing for the same resources. A production possibilities frontier with constant opportunity cost is a straight downward-sloping line. Opportunity cost is a term economists use to describe the relationship between what an item adds to your life, and how much it might cost you by not having it, taking into account your other options. Combination 1 is the choice of completely specializing in Pizza (producing 100 pizza and 0 broccoli), and point 2 shows that we give up 20 pizza in order to get 5 broccoli (which is why the PPF is downward sloping). Constant Opportunity Cost- Resources are easily adaptable for … Most opportunity costs will be fixed costs. 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