lectur12-page23

lectur12-page23 - given up (opportunity cost). If we...

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23 Law of Increasing Costs $ Ag. $ Non- Ag. 1 2 3 4 The graph above illustrates a production possibilities curve between the dollar value of agricultural goods and services on the y-axis, and the dollar value of non-agricultural goods and services on the x-axis. On the y-axis, you should see an equal, incremental increase of the dollar value of agricultural goods and services from 0 to 4 units. As the dollar value of agricultural goods and services is increased from 0 to 1 unit, you should notice that a very small amount of the dollar value of non-agricultural goods and services had to be
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Unformatted text preview: given up (opportunity cost). If we increase the dollar value of agricultural goods and services from 1 to 2 units (an equal, incremental increase), you should notice that an increased amount of the dollar value of non-agricultural goods and services had to be sacrificed (increasing opportunity cost). To get the next unit of the dollar value of agricultural production, we have to give up more and more non-agricultural production....
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