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jack bopp jack bopp
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2 years ago

The diagram below shows two production possibilities boundaries for Country X.

Short description: A graph plots consumer goods against capital goods. Long description: The horizontal axis represents consumer goods. The vertical axis represents capital goods. The graph plots two concave down decreasing curves. The first curve, P P B subscript 1 begins at a point on the vertical axis, passes through the points, F, A, and B, and ends at a point on the horizontal axis. The second curve, P P B subscript 2 begins at a point on the vertical axis (above the point where the first curve begins), passes through a point, E, and ends at a point on the horizontal axis (to the right of the first curve). The point, C lies near the horizontal axis and parallel to A. The point, D is to the right of point E.

FIGURE 1-4

Refer to Figure 1-4. If Country X were producing at point C,



▸ the opportunity cost of moving to point A is to give up an increase in the production of consumer goods.

▸ it is not possible to move to any point on PPB1 or PPB2 without technological progress.

▸ the opportunity cost of moving to point A is zero.

▸ the opportunity cost of moving to point A is to give up some capital goods.

▸ this is the maximum output possible from given resources.
Textbook 
Microeconomics

Microeconomics


Edition: 17th
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Quiera730Quiera730
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