Chapter 2, Problem 13P

To determine

To compute:

what is the opportunity cost of increasing production of consumption goods by units and by units and to find out does the law of increasing additional cost hold true for this nation.

Concept introduction:

Human capital: The human capital is the skills, education and expertise held by a person.

Opportunity cost: The opportunity cost is defined as the next best alternative forgone. This means that if we have to produce more capital goods instead of consumer goods we have to divert more resources for producing capital goods, so there is an opportunity cost for producing more capital goods instead of consumer goods.

Law of increasing additional cost: In economics the law of increasing production holds that if all the factors of production are at the maximum output the further production of the commodity will result in increasing the average cost.