Question

the table below shows the production possibilities schedule for an economy. (10) production alternatives capital goods per period consumer goods per period a 0 40 b 1 36 c 2 28 d 3 16 e 4 0 1. if the economy is producing at alternative b, what is the opportunity cost to it of producing at alternative c instead? 2. if the economy is producing at alternative c, what is the opportunity cost to it of producing at alternative d instead? 3. 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. 4. which point, b or c, would lead to higher economic growth? explain your answer

Answer 1

The opportunity cost of moving from alternative B to C is 8 consumer goods, and from C to D it is 12 consumer goods. Producing 30 consumer goods and 1 capital good is inefficient. Alternative C is more likely to result in higher economic growth because it invests more in capital goods.

Step-by-step explanation:

The question deals with production possibilities schedule and opportunity costs within an economy. When the economy is producing at alternative B and moves to alternative C, the opportunity cost is the consumer goods foregone (36 - 28 = 8 consumer goods). If the economy is at alternative C and moves to D, the opportunity cost is the additional consumer goods forgone (28 - 16 = 12 consumer goods).

Producing 30 units of consumer goods while producing 1 unit of capital goods is not on the provided production possibilities schedule, suggesting this is an inefficient production point as it is not on the production possibilities frontier (PPF). It represents an underutilization of resources.

Point C would more likely lead to higher economic growth than point B, because investing in more capital goods can enhance future production capacity.