When economists state that the opportunity cost of a product ...

[jayhills49]

When economists state that the opportunity cost of a product increases as more of it is produced, what do they mean? What is the opportunity cost?
 
  What will be an ideal response?

Question 2

According to the economic way of thinking, it is efficient to support a system of law and order through taxation because
 
  A) we need law and order.
  B) law and order are not free goods.
  C) law and order create significant spillover benefits.
  D) citizens ultimately despise law and order.

[Joy Chen]

Answer to Question 1

In general, the opportunity cost of increasing the production of one good or service is the forgone production of another good or service. The statement that the opportunity cost of a product increases as more of it is produced applies to production points on the production possibilities frontier. On the production possibilities frontier, resources are fully employed. Hence to increase the production of one good or service, resources must be switched away from the production of another good or service and hence the production of that good or service decreases. And, as more of the first good or service is produced, the opportunity cost of an additional unit becomes larger, so that the opportunity cost increases.

Answer to Question 2

C