Asked by: Bujor Grandal
asked in category: General Last Updated: 19th March, 2020

What is meant by constant opportunity costs and increasing opportunity costs?

What is meant by constant opportunity costs and increasing opportunity costs? A nation only experiences constant opportunity costs when its inputs for the production of goods are perfect substitutes, meaning that all the resources used in the production of one good can be allocated to produce another good.

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Moreover, what is meant by constant opportunity costs?

A steady potential price to a business that occurs when a company does not take advantage of a feasible chance to earn profits. An example of a constant opportunity cost would be if funds and resources were allocated to one project, but could have been allocated to a second project instead.

Also, what is the opportunity cost of increasing investment? Investors are always faced with options about where to invest their money to receive the highest or safest return. The investor's opportunity cost represents the cost of a foregone alternative. If you choose one alternative over another, then the cost of choosing that alternative becomes your opportunity cost.

Keeping this in consideration, what is the difference between increasing opportunity cost and constant opportunity cost?

In a constant opportunity cost, resources are equally suited for the production of two diverse goods. However, an increasing opportunity cost makes resources to be not equally suited for the production of two diverse goods.

What is opportunity cost give example?

Opportunity cost is the profit lost when one alternative is selected over another. The concept is useful simply as a reminder to examine all reasonable alternatives before making a decision. For example, you have $1,000,000 and choose to invest it in a product line that will generate a return of 5%.

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