1. Refer to the graph below. Assume that the country is producing at point C.

a. Does this country’s production possibilities curve exhibit increasing opportunity costs? Explain.

b. If this country were to go to war, the most likely move would be from point C to which point? Explain.

c. If the economy entered into a recession, the country would move from point C to which point? Explain.

Transcribed Image Text:

Quantity of military goods ("guns") PPC B F E C D Quantity of social goods ("butter")