1. Production Possibilities for the United States
   1. Graph the production possibilities curve for the United States with capital goods

Suppose that the United States is faced with the following output combinations for

capital goods and consumption goods.

Option Capital Goods Consumer Goods

A 0 800000

B 25000 600000

C 50000 400000

D 75000 200000

E 100000 0

on the x-axis and consumer goods on the y-axis.

1. What is the numerical value for the y-intercept in this example?
2. Solve for the slope between Options A and B.
3. Does the Law of Increasing Opportunity Costs hold for this example? Explain

why or why not.

1. State the cost ratio between the two goods in the United States.
2. If Country X wanted to experience higher levels of economic growth over the

next few years, would they be better off choosing option B (a combination of

25,000 capital goods and 600,000 consumer goods) or option D (a combination of

75,000 capital goods and 200,000 consumer goods)? Explain.