You can see from the graph that the opportunity costs are constant as we move along the various points of the PPF. What is meant by constant opportunity costs and increasing opportunity costs? So the opportunity cost of buying an SUV includes an alternative option, such as buying a less expensive sedan. FEEDBACK: If resources are perfectly adaptable for use in the production of all goods in the economy, this PPF will be drawn as a downward-sloping straight line because the opportunity costs will be constant. The graph of total fixed cost is simply a horizontal line since total fixed cost is constant and not dependent on output quantity. Most opportunity costs will be fixed costs. This graph considers the factors of production (and assumes full employment), charting the ideal production level of two products competing for the same resources. Why is it that the pre-trade production points have a bearing on comparative costs under increasing-cost conditions but not under conditions of constant-costs? The graph on the left shows increasing opportunity cost and the graph on the right shows constant opportunity cost. The graph on the left shows increasing opportunity cost because as you move from point A to B you give up 10 pizzas but as you move from point B to C you give up 30 pizzas. Constant Opportunity Cost- Resources are easily adaptable for … Opportunity costs and the law of increasing opportunity costs are illustrated by a production possibility frontier (PPF) or a production possibility curve (never a straight line). Working with Numbers and Graphs Illustrate constant opportunity costs in a table similar to the one in Exhibit 1(a). Under what conditions will a country experience constant or increasing costs? Average Costs (Per Unit Cost): can be used to compare to product price TFC AFC Q = TVC AVC Q = TC ATC Q = (or AFC + AVC) Marginal Costs: the extra or additional cost of producing one more unit of output; these are the costs in which the firm exercises the most control TC MC Q D = D Essential Graph: Sample PPF with constant opportunity cost (at each of the 6 different points) and plotted them to get a PPF curve. For example, the opportunity cost of a leather jacket at point G would be higher than point B. A production possibilities frontier with constant opportunity cost is a straight downward-sloping line. Next, draw a PPF that is based on the data in the table Illustrate increasing opportunity costs (for one good) in a table similar to the one in Exhibit 2(a). 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