1. Production Possibilities

The following production possibilities table data represent the amount of consumer goods and capital goods produced in the United States in a given day.

Option Consumer Goods Capital Goods

A 80,000 0

B 75,000 2500

C 60,000 5000

D 35,000 7500

E 0 10000

A. Plot the above options as a production possibilities curve, placing capital goods on the x-axis and consumer goods on the y-axis.

B. What is the numerical value for the y-intercept on this graph?

C. State the four assumptions that the table and curve are based upon.

D. Solve for the slope between each point, or option, on the graph, specifically going from Option A to B, Option B to C, Option C to D and Option D to E.

E. Between options B and C, what is the cost of one more capital good?

F. Between options B and C, what is the cost of one more consumer good?

G. Does the Law of Increasing Opportunity Costs hold in this example? Explain why or why not.

H. Show a point of inefficiency on your graph. Label this as I.

I. Show a point that is currently unattainable on your graph. Label this as U.

J. Explain how a firm, in the future, can reach a point that is currently unattainable.

2. Statement Identification

Given the following statements, identify which one is a positive economic statement and which one is a normative economic statement.

2a. Despite the war in the Ukraine, first quarter 2022 GDP grew in the nations using the euro.

2b. Because of the war in the Ukraine, GDP growth for the second quarter of 2022 in the nations using the euro will decline.

3. What is your opportunity cost of doing this assignment?