In economics, the law of increasing costs is a principle that states that to produce an increasing amount of a good a supplier must give up greater and greater amounts of another good. The best way to look at this is to review an example of an economy that only produces two things - cars and oranges.
What is the law of increasing opportunity cost?
Lesson 5: The law of increasing opportunity cost: As you increase the production of one good, the opportunity cost to produce the additional good will increase. First, remember that opportunity cost is the value of the next-best alternative when a decision is made; it's what is given up.
How does the law of increasing costs affect production choices?
The Law of Increasing Costs affects an economy’s production choices by influencing decisions on the allocation of resources. It underlines the trade-offs that must be made in the production of different goods and services.
