A nation's residents can allocate their scarce resources either to producing consumption goods or to producing human
Question:
A nation's residents can allocate their scarce resources either to producing consumption goods or to producing human capital-that is, providing themselves with training and education. The table below displays the production possibilities for this nation:
a. Suppose that the nation's residents currently produce combination A. What is the opportunity cost of increasing production of consumption goods by 10 units? By 60 units?
b. Does the law of in creasing additional cost hold true for this nation? Why or why not?
2 -14. Like physical capital, human capital produced in the present can be applied to the production of future goods and services. Consider the table in Problem 2-13, and suppose that the nation's residents are trying to choose between combination C and combination F. Other things being equal, will the future production possibilities curve for this nation be located farther outward if the nation chooses combination F instead of combination C?
Explain.
Problem 2-13
A nation's residents can allocate their scarce resources either to producing consumption goods or to producing human capital-that is, providing themselves with training and education. The table below displays the production possibilities for this nation:
a. Suppose that the nation's residents currently produce combination A. What is the opportunity cost of increasing production of consumption goods by 10 units? By 60 units?
b. Does the law of in creasing additional cost hold true for this nation? Why or why not?
Step by Step Answer:
Lets address each of the questions based on the provided production possibilities table a Opportunity Cost of Producing Additional Consumption Goods Opportunity cost is defined as the value of the nex...View the full answer
