1.3 Increasing Opportunity Cost
Increasing Opportunity Cost (Guns vs Butter)
Key data (marginal costs of butter to produce one more gun):
MC_1 = 4 pounds of butter
MC_2 = 6 pounds of butter
MC_3 = 10 pounds of butter
MC_4 = 14 pounds of butter
MC_5 = 16 pounds of butter
Total butter forgone for 5 guns: 4 + 6 + 10 + 14 + 16 = 50 pounds
Interpretation: opportunity cost of butter rises as gun production increases → increasing opportunity costs (OC).
Marginal analysis basics (in this context):
For each additional gun, butter forgone equals the marginal cost of that gun.
The sequence ext{MC} = igl
ightarrow igl(4, 6, 10, 14, 16igr) shows OC rising with output.
Four concise ways to explain increasing OC (must reference marginal analysis):
1) Marginal perspective (explicitly marginal): as you produce more guns, the butter forgone per additional gun increases (MC rises).
2) Stepwise increase framing: for each additional gun, you give up more butter than for the previous one.
3) Rate framing: butter decreases at an increasing rate as guns rise; i.e., MC increases with output.
4) Cost-curve framing: the marginal cost is rising; corresponding to an upward-sloping MC curve / diminishing returns; use the data (4, 6, 10, 14, 16) to back up the claim.
PPC visualization option:
Plot (Guns, Butter) along the PPC; the slope becomes steeper as you move to more guns, reflecting increasing OC.