Opportunity Cost of Producing a Good | CFA® Level 1 Test Prep

Opportunity Cost of Producing a Good

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Question

The opportunity cost of producing a good:

Answers

A. generally decreases as the country produces more and more of the good.

B. is not dependent on the marginal cost of producing the good.

C. generally increases as the country produces more and more of the good.

D. is usually uniform across countries.

E. none of these answers.

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Explanations

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A. B. C. D. E.

The opportunity cost of producing a good beyond some level of production will often increase. This is because of rising marginal costs as the level of output increases. Thus, the degree to which a country will specialize in the production of a good is limited.

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