1. Upon what specific assumptions is the below production possibilities curve based? (It may help to try drawing the production possibilities curve first on scratch paper.) 2. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? 3. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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1. 1. Upon what specific assumptions is the below production possibilities curve based? (It may help to try drawing the production possibilities curve first on scratch paper.)
2. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of
increasing opportunity costs: its shape or its length?
3. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available
resources?
4. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technology allow production beyond the current production
possibilities curve? Could international trade allow a country to consume beyond its current production possibilities curve?
Production Alternatives
Type of Production A
B
D
Automobiles
4
6
8
Forklifts
30
27
21
12
Transcribed Image Text:1. 1. Upon what specific assumptions is the below production possibilities curve based? (It may help to try drawing the production possibilities curve first on scratch paper.) 2. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length? 3. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources? 4. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technology allow production beyond the current production possibilities curve? Could international trade allow a country to consume beyond its current production possibilities curve? Production Alternatives Type of Production A B D Automobiles 4 6 8 Forklifts 30 27 21 12
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