Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts): LO5

a. Show these da t garphically. Upon what specific assumptions is this production possibilities curve based?

b. If the economy is at poCin, wt hat is the cost of two more automobiles? Of six more forklifts? Explain how the production possibilities curve reflects the law of increasing opportunity costs.

c. If the economy chacatrerized by this porduction possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?

d. What would production at a point outside the production possibilities curve indicate? What must occur before the economy can attain such a level of production?

Transcribed Image Text:

Production Alternatives Type of Production A B C D E Automobiles 0 2 4 6 8 Forklifts 30 27 21 12 0