What are some examples of the law of increasing opportunity costs?

The law of increasing opportunity costs states that as production of one good increases, the opportunity cost of producing additional units rises. For example, if a country shifts resources from wheat to produce more cars, it may initially sacrifice a small amount of wheat, but as more wheat is sacrificed, the loss in wheat production becomes greater. Similarly, a factory producing shoes might find that reallocating workers to make bags results in more significant reductions in shoe output as skilled labor becomes less suited for bag production. This principle highlights the inefficiencies that arise when reallocating resources between different goods.