So, if all the activities we mentioned contribute to the final product or service, that means that virtually every department is involved â not just manufacturing or operations, but also human resources, accounting, marketing, and so on. This is the essence of Total Quality Management (TQM).
In economics, the law of increasing costs is a principle that states that once all factors of production (land, labor, capital) are at maximum output and efficiency, producing more will cost more than average. As production increases, the opportunity cost does as well. The best way to look at this is to review an example of an economy that only produces two things - cars and oranges. If all the resources of the economy are put into producing only oranges, there will not be any factors of production available to produce cars.
Principles of Economics/Opportunity Costs. < Principles of Economics. Opportunity Costs. The opportunity cost of a good or of performing an action, also known as the greatest cost, is the lost value of alternate options that could have been chosen, rather than the one that was chosen.