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 195000 0

B 180000 6000

C 150000 12000

D 90000 18000

E 0 24000

1. Plot the above options as a production possibilities curve, placing capital goods on the x-axis and consumer goods on the y-axis.
2. What is the value for the y-intercept on this graph?
3. State the four assumptions that the table and curve are based upon.
4. 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.
5. Between options B and C, what is the cost of one more capital good?
6. Between options B and C, what is the cost of one more consumer good?
7. Does the Law of Increasing Opportunity Costs hold in this example? Explain why it does or does not hold in this specific example.
8. Show a point of inefficiency on your graph. Label this as I.
9. Show a point that is currently unattainable on your graph. Label this as U.
10. Explain how a firm, in the future, can reach a point that is currently unattainable.

1. Statement Identification

Given the following two statements, identify which one is a positive economic

statement and which one is a normative economic statement.

1. The Federal Reserve has raised interest rates to their highest level in 22 years.
2. The Federal Reserve will raise interest rates even higher this year.

1. What is your personal opportunity cost of doing this assignment?