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jack bopp jack bopp
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2 months 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. At point B,



▸ Country X is producing too many consumer goods and too few capital goods.

▸ the opportunity cost of producing an extra unit of capital goods is higher than at point A.

▸ the price of capital goods is higher than the price of consumer goods.

▸ the opportunity cost of producing an extra unit of consumer goods is higher than at point A.

▸ the price of consumer goods is equal to the price of capital goods.
Textbook 

Microeconomics


Edition: 17th
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krissyc39krissyc39
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2 months ago
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the opportunity cost of producing an extra unit of consumer goods is higher than at point A.

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