Opportunity Cost along the Production Possibility Frontier
The concept of opportunity cost refers to the value of the next best alternative forgone when a decision is made. Along the production possibility frontier (PPF), opportunity cost increases as more of one good is produced. This is due to the idea of increasing marginal opportunity cost.

Increasing Marginal Opportunity Cost
- As an economy moves along the PPF and produces more of one good, resources that are better suited for producing the other good are reallocated.
- For example, consider a country that can produce either cars or computers. As more cars are produced, resources such as skilled labor and machinery that are better suited for computer production are diverted to car production.
- The opportunity cost of producing an additional car increases because the resources being used are less efficient in car production compared to computer production.

Example
- Suppose a country can produce either 100 cars or 200 computers with its resources fully utilized. If the country decides to produce 120 cars, it will have to reduce computer production to 190 units.
- The opportunity cost of producing the 20 extra cars would be the 10 fewer computers that could have been produced. The opportunity cost increases as the country moves along the PPF.
In conclusion, opportunity cost increases along the PPF due to the concept of increasing marginal opportunity cost. As resources are reallocated from one good to another, the next best alternative forgone becomes more valuable, leading to a higher opportunity cost.