5. Refer to the following production possibilities table for consumer goods (automobiles) and capital goods (forklifts): LO1.6

a. Show these data graphically. Upon what specific assumptions is this production possibilities curve based?

b. If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its length?

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

d. Is production at a point outside the production possibilities curve currently possible? Could a future advance in technology allow production beyond the current production possibilities curve? Could international trade allow a country to consume beyond its current production possibilities curve?

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