The table below shows the production possibilities schedule for an economy.
Production Alternatives Capital goods per periodConsumer goods per period A040B136C228D316E40
- Putting capital goods per period on the horizontal axis and consumer goods per period on the vertical axis, graph the production possibilities curve for the economy.
- If the economy is producing at alternative B, what is the opportunity cost to it of producing at alternative C instead?
- If the economy is producing at alternative C, what is the opportunity cost to it of producing at alternative D instead?
- Is it possible for this economy to produce 30 units of consumer goods per period while producing 1 unit of capital goods? Would this combination of goods represent efficient or inefficient production? Explain.
- Which point, B or C, would lead to higher economic growth? Explain your answer.