What explains the law of increasing opportunity costs?

The law of increasing opportunity costs is based on the idea that as production of a good increases, the opportunity cost of producing an additional unit of that good also rises. This situation occurs because resources are not equally adaptable to the production of all goods.

When resources are allocated to produce one good, certain resources that are more efficient at producing another good may become underutilized. As more of the first good is produced, less suitable resources are drawn into the production process, leading to less efficient use of those resources and thus increasing the opportunity costs. This reflects the reality that shifting resources from the production of one good to another involves sacrifices, particularly as production ramps up and less compatible resources are involved.

The other choices do not correctly capture the essence of this law; for example, the first choice implies that all resources are equally versatile, which contradicts the principle of increasing opportunity costs. Similarly, the notions of absolute and comparative advantages and terms of trade are related concepts in economics but do not directly explain the law of increasing opportunity costs.