Shift along concave PPF increases opportunity cost of public goods

Steps:

• Identify PQ and PR as points on a production possibility frontier (PPF) for private and public goods.
• Note the PPF is concave to the origin, reflecting increasing opportunity costs.
• Observe the change from PQ to PR moves toward more public goods production.
• Calculate that the slope of the PPF steepens, showing higher private goods forgone per unit of public good.

Why D is correct:

• Law of increasing opportunity cost: along a concave PPF, producing more public goods requires sacrificing progressively more private goods, raising the opportunity cost of public goods.

Why the others are wrong:

• A: Prices are market-determined, not directly affected by PPF shifts between goods.
• B: Public goods pricing isn't tied to PPF movements; no price increase implied.
• C: Opportunity cost of private goods decreases when shifting toward public goods.

Final answer: D