1a. Using the following combinations as Production Possibilities data for consumer goods and capital goods, answer the following questions: A Consumer Goods 25 50 75 100 Capital Goods 100 90 75 45 b. In the space below, graph the above production possibilities schedule (label everything): What is the opportunity cost from point D to point C? Show formulas, calculations, answers, and brief analytical с. statement. d. What is the opportunity cost of two goods from point A to point B? analytical statement. Show formulas, calculations, answers, and brief

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question
Can you help with 1c and 1d?
### Opportunity Cost Questions

**Question 1c:**
The opportunity cost from point D to point C is ____.

- 30 capital goods
- 30 consumer goods
- 25 consumer goods
- 25 capital goods

**Question 1d:**
The opportunity cost of two goods from point A to point B is ____.

- 25 consumer goods
- 5 consumer goods
- 10 capital goods
- 0.8 capital goods

These questions are designed to assess understanding of opportunity cost in the context of production possibilities. Opportunity cost is the value of the next best alternative that is forgone when making a decision. The correct answers depend on the specific details of the production possibilities curve or information provided in the related graph or diagram (not shown here).
Transcribed Image Text:### Opportunity Cost Questions **Question 1c:** The opportunity cost from point D to point C is ____. - 30 capital goods - 30 consumer goods - 25 consumer goods - 25 capital goods **Question 1d:** The opportunity cost of two goods from point A to point B is ____. - 25 consumer goods - 5 consumer goods - 10 capital goods - 0.8 capital goods These questions are designed to assess understanding of opportunity cost in the context of production possibilities. Opportunity cost is the value of the next best alternative that is forgone when making a decision. The correct answers depend on the specific details of the production possibilities curve or information provided in the related graph or diagram (not shown here).
**Production Possibilities Analysis**

**a. Production Possibilities Data:**

The table below represents the combinations of consumer goods and capital goods within the context of production possibilities:

|          | A  | B  | C  | D  | E  |
|----------|----|----|----|----|----|
| Consumer Goods | 0  | 25 | 50 | 75 | 100 |
| Capital Goods  | 100| 90 | 75 | 45 | 0  |

**b. Graphing the Production Possibilities Schedule:**

Create a graph with the following details:
- X-axis: Consumer Goods
- Y-axis: Capital Goods
- Plot the points A, B, C, D, and E using the coordinates from the table.
- Connect the points to form the production possibilities frontier (PPF), demonstrating the trade-off between consumer goods and capital goods.

**c. Opportunity Cost (D to C):**

To calculate the opportunity cost from point D to C:

- Capital Goods decrease from 45 to 75.
- Consumer Goods increase from 75 to 50.
- Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (75 - 45) / (50 - 75).
- Analyze the negative slope to understand the trade-off.

**d. Opportunity Cost (A to B):**

To determine the opportunity cost from point A to B:

- Capital Goods decrease from 100 to 90.
- Consumer Goods increase from 0 to 25.
- Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (90 - 100) / (25 - 0).

**e. Opportunity Cost (E to D):**

For shifting from point E to D:

- Capital Goods increase from 0 to 45.
- Consumer Goods decrease from 100 to 75.
- Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (45 - 0) / (75 - 100).

**f. Opportunity Cost of Producing at B:**

If producing at point B, calculate the opportunity cost of consumer goods:

- Determine the slope between points B and C for an incremental view.
- Use the formula for opportunity cost highlighting any decrease in capital goods versus an increase in consumer goods. 

In all instances, provide calculations, analyses, and brief statements about the economic implications of these trade-offs.
Transcribed Image Text:**Production Possibilities Analysis** **a. Production Possibilities Data:** The table below represents the combinations of consumer goods and capital goods within the context of production possibilities: | | A | B | C | D | E | |----------|----|----|----|----|----| | Consumer Goods | 0 | 25 | 50 | 75 | 100 | | Capital Goods | 100| 90 | 75 | 45 | 0 | **b. Graphing the Production Possibilities Schedule:** Create a graph with the following details: - X-axis: Consumer Goods - Y-axis: Capital Goods - Plot the points A, B, C, D, and E using the coordinates from the table. - Connect the points to form the production possibilities frontier (PPF), demonstrating the trade-off between consumer goods and capital goods. **c. Opportunity Cost (D to C):** To calculate the opportunity cost from point D to C: - Capital Goods decrease from 45 to 75. - Consumer Goods increase from 75 to 50. - Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (75 - 45) / (50 - 75). - Analyze the negative slope to understand the trade-off. **d. Opportunity Cost (A to B):** To determine the opportunity cost from point A to B: - Capital Goods decrease from 100 to 90. - Consumer Goods increase from 0 to 25. - Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (90 - 100) / (25 - 0). **e. Opportunity Cost (E to D):** For shifting from point E to D: - Capital Goods increase from 0 to 45. - Consumer Goods decrease from 100 to 75. - Opportunity Cost = Change in Capital Goods / Change in Consumer Goods = (45 - 0) / (75 - 100). **f. Opportunity Cost of Producing at B:** If producing at point B, calculate the opportunity cost of consumer goods: - Determine the slope between points B and C for an incremental view. - Use the formula for opportunity cost highlighting any decrease in capital goods versus an increase in consumer goods. In all instances, provide calculations, analyses, and brief statements about the economic implications of these trade-offs.
Expert Solution
trending now

Trending now

This is a popular solution!

video

Learn your way

Includes step-by-step video

steps

Step by step

Solved in 2 steps

Blurred answer
Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education