00:01
So we're going to be looking here at a very interesting concept on the low of increasing opportunity cost.
00:10
Increasing opportunity cost.
00:14
I'll just put that as oc, just for progress sake.
00:19
So the law of increasing opportunity costs by definition would look at a situation where as you increase the production, as you increase, the production of one good, of one good.
00:39
The opportunity cost, oc, to produce the additional good will increase.
01:00
Okay, so with this in the back of our minds, we can then look at this in how it would appear in a diagram.
01:09
So we will have to call upon the production possibility frontier.
01:15
So what would actually, if we have good x and good y in this particular instance, we can actually use the products that have been selected here.
01:30
We have rabbits and berries.
01:33
So let's see an economy that produces rabbits.
01:37
Quite an interesting economy, you can say.
01:39
And berries, right? okay, so this economy producing berries and rabbits, the increasing opportunity cost arises from the simple fact that, if you have, for instance, production or at this level, where you produce more rabbits than you do, berries, you will notice that if you are going to to come from this point.
02:17
Okay, let's suppose you are at point a, just to make things a little easier to point b, if point a is your original production level, if you are going to increase the production of rabbits, so you can actually see that an increase in the production of rabbits will actually increase, the opportunity cause...