– Opportunity cost is most plainly visible when spending more money on one thing means that less money can be spent on another thing.
When someone compares marginal benefits associated with an activity to its marginal costs that person is making a?
2) A decision involves marginal analysis when the marginal benefits associated with an activity are compared to its marginal costs.
What is the additional cost associated with one more unit?
The marginal cost of producing a good or service is the additional cost incurred by producing one more unit of that good or service. The marginal benefit of producing a good or service is the additional benefit earned by producing one more unit.
When the marginal benefit equals the marginal cost that stable level is referred to as an?
marginal cost. the additional cost of producing one more unit of an activity. when the marginal benefit equals the marginal cost, that stable level is referred to as an . optimal .
What is the reason that the additional opportunity cost of producing an additional unit of a good or service eventually increases?
In the Real World, the opportunity cost increases as production increases, Because: Some resources are better suited for producing some good or service than others .
What are three things a PPC shows?
The Production Possibilities Curve (PPC) is a model used to show the tradeoffs associated with allocating resources between the production of two goods. The PPC can be used to illustrate the concepts of scarcity, opportunity cost, efficiency, inefficiency, economic growth, and contractions .
What type of decision is being made when the benefits outweigh the cost?
As a quick rule: When total benefits rise more than total costs, then the action is logical . When total costs rise more than total benefits, then the action is illogical.
How a change in opportunity cost can affect behavior?
When opportunity costs change, incentives change, and people’s choices and behavior change . Changes in incentives cause people to change their behavior in predictable ways.
What is marginal cost and benefit?
A marginal benefit is the maximum amount of money a consumer is willing to pay for an additional good or service . ... The marginal cost, which is directly felt by the producer, is the change in cost when an additional unit of a good or service is produced.
How do you calculate marginal cost and benefit?
The formula used to determine marginal cost is ‘ change in total cost/change in quantity . ‘ while the formula used to determine marginal benefit is ‘change in total benefit/change in quantity. ‘
What is the meaning marginal benefit?
A marginal benefit is a maximum amount a consumer is willing to pay for an additional good or service . ... The marginal benefit for a consumer tends to decrease as consumption of the good or service increases. In the business world, the marginal benefit for producers is often referred to as marginal revenue.
What is the reason for the law of increasing opportunity costs group of answer choices?
The law of increasing opportunity cost is the concept that as you continue to increase production of one good, the opportunity cost of producing that next unit increases . This comes about as you reallocate resources to produce one good that was better suited to produce the original good.
Is the result of low cost producers focusing?
Slope of PPF=opportunity cost. ... Result of low cost producers focusing all efforts on producing the one good for which they have lowest opportunity cost . As long as people have different opportunity costs, people can gain from specialization and trade.
The marginal opportunity cost of adding a unit to quantity is the vertical distance between the supply curve and the horizontal axis . 2. The total alternative opportunity cost, which is the sum of the marginal costs, is the area under the supply curve up to the quantity supplied.
How do you know if opportunity cost is increasing?
When the PPC is a straight line, opportunity costs are the same no matter how far you move along the curve. When the PPC is concave (bowed out) , opportunity costs increase as you move along the curve. When the PPC is convex (bowed in), opportunity costs are decreasing.
What is the law of increasing opportunity cost quizlet?
The law of increasing opportunity cost says that: ... as output increases for either one of the goods on a production possibilities curve, the opportunity cost of additional units of that good will be greater and greater .
