Cost in Economia

Let's apply that concept to Economia. Table 1 tells us that if Economia produces no machines at all, it can produce 1000 units of food. If Economia produces some machines, it will produce less than 1000 units of food. The total cost of producing any given quantity of machines is the food given up -- that is, 1000 units minus the quantity of food that Economia does produce. So the cost of producing, say, 300 machines rather than no machines is 90 units of food. Here's the idea: if Economia produces no machines, they have resources enough to produce 1000 of food. With 300 machines, there are only resources enough to produce 910 of food. Thus, to go from no machines to 300 machines, Economia has had to give up (forego) 1000-910=90 units of food.

The more machines, the less food and so the higher the cost. This is shown in Figure 3. As we see in Figure 3, the cost of machines increases with the number of machines produced, and it increases at an increasing rate. (That is, the cost curve gets steeper as we move to the right in the diagram).

Cost in Economia

Figure 3. Total Cost of Machine Production