Question

During World War Il, what was an opportunity cost of the decision to increase production of military goods?

Answer 1

During World War II one opportunity cost of the decision to increase production of military goods was the lack of the production of meat foods.

Many food rationings occurred on the home front leading to shortages, hostilities, and a black market for items such as cheese, butter, sugar, processed foods, etc.

Answer 2

When opportunity costs rise as more of a good is consumed, the production possibilities frontier will be concave with respect to the origin. Suppose that an economy produces civilian goods and military goods. If technological breakthroughs increase its ability to produce military goods, then the production possibilities frontier will pivot outward around the axis for military goods. One explanation for the drop in the standard of living in the Soviet Union during World War II is that the war led to a movement along its production possibilities frontier away from civilian goods and towards military goods.