Problem:
Below is a production possibilities table for consumer good (automobiles) and capital goods (forklifts):
Production Alternatives
|
Types of production
|
A
|
B
|
C
|
D
|
E
|
|
Automobiles
|
0
|
2
|
4
|
6
|
8
|
|
Forklifts
|
30
|
27
|
21
|
12
|
0
|
a. Show these data graphically. On what specific suppositions is this production possibilities curve based?
b. If the economy is at point C, what is cost of one more automobile? Of one more forklift? Illustrate how the production possibilities curve reflects the law of increasing opportunity costs.
c. If the economy typified by this production possibilities table and curve were producing three automobiles and twenty forklifts, what could you wrap up about its use of its accessible resources?
d. What would production at the point outside the production possibilities curve indicate? What should take place before the economy can accomplish such a level of production?