Intermediate Economics

Short Answers and Calculations (60marks) Section A: Chapter 1-4 Production possibilities data: Use the information provided in the schedule below to answer the questions that follow A B C D E Capital goods 10 20 30 40 Consumer goods 200 180 140 80 0 1. . What happens if we produce 140 units of consumer goods and 30 units of capital goods? 1mark 2. What happens if we produce 140 units of consumer goods and 10 units of capital goods? 1mark 3. What is the opportunity cost if the economy decides to specialize in the production of capital goods? 1mark 4. Define externalities and provide example to support explanation. 2marks 5. Using supply and demand analysis, states the non-price determinant affected and then explains and illustrate graphically the effect of the following situations. 4marks a. An increase in the cost of farm equipment used by tomato farmers