Question

A town produces a large number of tires and a small amount of kiwi fruit. As kiwis become more popular, the town decides to grow more kiwis and decrease tire manufacturing. According to the law of increasing costs, _____.

A) The cost of producing tires will decrease

B) The cost of producing kiwis will increase

C) The cost of producing kiwis will decrease while the cost of producing tires will increase

D) The cost of producing tires will decrease while the cost of producing kiwis will increase

Answer 1

The cost of producing kiwis will increase -GradPoint

Answer 2

Answer;

The cost of producing kiwis will increase.

According to the law of increasing costs the cost of producing kiwis will increase.

Explanation;

The law of increasing costs holds that an increase in output brings with it a higher cost for each additional unit of output.

Once the factors of production (land, capital, labor) are increased and are at maximum and efficiency, then producing more will cost more than average.

Answer 3

Answer;

The cost of producing kiwis will increase.

According to the law of increasing costs the cost of producing kiwis will increase.

Explanation;

The law of increasing costs holds that an increase in output brings with it a higher cost for each additional unit of output.

Once the factors of production (land, capital, labor) are increased and are at maximum and efficiency, then producing more will cost more than average.