Final answer:
The opportunity cost of the first 2,000 automobiles is 1,000 tons of beef and the production possibilities curve reflects the law of increasing opportunity costs. The curve could be shifted by changes in resources, technology, or productivity.
Step-by-step explanation:
The production possibilities curve is a graphical representation that shows the different combinations of two goods or services that can be produced within a given resource limit. To plot the data provided, you would place 'Automobiles' on one axis and 'Beef' on the other axis and each point A through E represents a different combination of production possibilities.
The opportunity cost of the first 2,000 automobiles produced is the amount of beef that could have been produced instead, which is from 10,000 tons to 9,000 tons or 1,000 tons of beef. The opportunity cost per automobile is highest between points D and E, where an additional 2,000 automobiles cost 4,000 tons of beef, which is 2 tons of beef per automobile. The opportunity cost per thousand tons of beef is highest between points A and B, where producing an additional 1,000 tons of beef costs 2,000 automobiles, or 2 automobiles per 1,000 tons of beef.
Yes, this production possibilities curve reflects the law of increasing opportunity costs, meaning that as production of one good increases, the opportunity cost of producing more of that good also increases. This is seen as the curve becomes steeper between points C and E.
To shift the production possibilities curve, assumptions regarding resources, technology, and productivity could be changed. For instance, improvements in technology or increases in the labor force could shift the curve outward, indicating a higher potential for production.