2. Given the following diagram of a production possibilities frontier for a country. Assume that this country produces only two types of goods, capital goods (K) and consumer goods (C). (Graph is not drawn to scale.) CAMITAL GOOAS (K) Laco,2s0) BC1o9zo0) cca00, 1s0) CONSUMER coss (C) a. What is the opportunity cost of producing 25 more units of capital goods if this economy is currently producing at point B? b. What is the opportunity cost of producing 25 more units of consumer goods if this economy is currently producing at point B? e. What is the opportunity cost of producing 1 more unit of capital goods if this economy is currently producing at point C? d. What is the opportunity cost of producing 1 more unit of consumer goods if the economy is currently producing at point D? e. Suppose that there is a technological improvement in producing consumer goods that results in twice as many units of consumer goods being produced from the available resources in this economy. Draw the new production possibility frontier for this economy given this change. Assume that there are no changes in technology with regard to cupital good production.

2. Given the following diagram of a production possibilities frontier for a country. Assume that this country produces only two types of goods, capital goods (K) and consumer goods (C). (Graph is not drawn to scale.) CAMITAL GOOAS (K) Laco,2s0) BC1o9zo0) cca00, 1s0) CONSUMER coss (C) a. What is the opportunity cost of producing 25 more units of capital goods if this economy is currently producing at point B? b. What is the opportunity cost of producing 25 more units of consumer goods if this economy is currently producing at point B? e. What is the opportunity cost of producing 1 more unit of capital goods if this economy is currently producing at point C? d. What is the opportunity cost of producing 1 more unit of consumer goods if the economy is currently producing at point D? e. Suppose that there is a technological improvement in producing consumer goods that results in twice as many units of consumer goods being produced from the available resources in this economy. Draw the new production possibility frontier for this economy given this change. Assume that there are no changes in technology with regard to cupital good production.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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