capital goods (forklifts): Type of Production Production Alternatives A. B D E Automobiles 2 4 6. Forklifts 30 27 21 12 Refer to the above table and show these data graphically below. Upon what specific assumptions is this production possibilities curve based? Show these data graphically below. What are specific assumptions behind PPC? Forklifts 30 Four Assumptions of production possibilities curve (See p.8 under Production Possibilities Model a) 20 b) c) 10 d) +++ 4 6 8 →Automobiles If the economy is at point C, what is the cost of one more automobile? What if at point D? Explain how production possibilities curve reflects the law of increasing opportunity costs. pportunity cost of one more automobile @ C: => In order to get 2 additional automobiles, you have to sacrifice forklifts. So the opportunity cost of 2 more automobiles is the forgone_ forklifts. Then, for 1 additional automobile,. auto; marginal cost is_ less forklifts. hus, the opportunity cost of one more automobile @ C is forklifts should be sacrificed. The marginal benefit is 1 more forklifts. forklifts. Opportunity cost of one more automobile @ D: => PPC and the law of increasing opportunity costs: Increasing opportunity costs are reflected in the concave-from-the-origin shape of the production possibility curve (PPC). This means the economy must give up (constantly the same, larger and larger, smaller and smaller ) amounts of forklift to get constant added amounts of automobiles-and vice versa. c. If the economy characterized by this production possibilities were producing 3 automobiles and 20 forklifts, what could you conclude about its use of available resources? d. What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production?
capital goods (forklifts): Type of Production Production Alternatives A. B D E Automobiles 2 4 6. Forklifts 30 27 21 12 Refer to the above table and show these data graphically below. Upon what specific assumptions is this production possibilities curve based? Show these data graphically below. What are specific assumptions behind PPC? Forklifts 30 Four Assumptions of production possibilities curve (See p.8 under Production Possibilities Model a) 20 b) c) 10 d) +++ 4 6 8 →Automobiles If the economy is at point C, what is the cost of one more automobile? What if at point D? Explain how production possibilities curve reflects the law of increasing opportunity costs. pportunity cost of one more automobile @ C: => In order to get 2 additional automobiles, you have to sacrifice forklifts. So the opportunity cost of 2 more automobiles is the forgone_ forklifts. Then, for 1 additional automobile,. auto; marginal cost is_ less forklifts. hus, the opportunity cost of one more automobile @ C is forklifts should be sacrificed. The marginal benefit is 1 more forklifts. forklifts. Opportunity cost of one more automobile @ D: => PPC and the law of increasing opportunity costs: Increasing opportunity costs are reflected in the concave-from-the-origin shape of the production possibility curve (PPC). This means the economy must give up (constantly the same, larger and larger, smaller and smaller ) amounts of forklift to get constant added amounts of automobiles-and vice versa. c. If the economy characterized by this production possibilities were producing 3 automobiles and 20 forklifts, what could you conclude about its use of available resources? d. What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:(Key Question) Below is a production possibilities table for consumer goods (automobiles) and
capital goods (forklifts):
Туре of Production
Production Alternatives
A
B
D
E
Automobiles
2
6
8.
Forklifts
30
27
21
12
4. Refer to the above table and show these data graphically below. Upon what specific assumptions is
this production possibilities curve based?
a. Show these data graphically below. What are specific assumptions behind PPC?
Four Assumptions of production possibilities
curve (See p.8 under Production Possibilities Model:
Forklifts 30-
a)
20
b)
c)
10
2 4
Automobiles
8.
b. If the economy is at point C, what is the cost of one more automobile? What if at point D? Explain
how production possibilities curve reflects the law of increasing opportunity costs.
Opportunity cost of one more automobile @ C: => In order to get 2 aditional automobiles, you have
to sacrifice forklifts. So the opportunity cost of 2 more automobiles is the forgone_ forklifts.
Then, for 1 additional automobile,
auto; marginal cost is
wforklifts should be sacrificed. The marginal benefit is 1 more
less forklifts.
Thus, the opportunity cost of one more automobile @ C is
forklifts.
Opportunity cost of one more automobile @ D: =>
PPC and the law of increasing opportunity costs: Increasing opportunity costs are reflected in
the concave-from-the-origin shape of the production possibility curve (PPC). This means the
economy must give up (constantly the same, larger and larger, smaller and smaller )
amounts of forklift to get constant added amounts of automobiles-and vice versa.
forklifts.
c. If the economy characterized by this production possibilities were producing 3 automobiles
and 20 forklifts, what could you conclude about its use of available resources?
d. What would production at a point outside the production possibilities curve indicate?
What must occur before the economy can attain such a level of production?
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