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Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
Edition 2ISBN: 978-0077416409 Exercise 14
Below is a production possibilities table for consumer goods (automobiles) and capital goods (forklifts):
a. Show these data graphically. Upon what specific assumptions is this production possibilities curve based?
b. If the economy is at point C , what is the cost of two more automobiles? Of six more forklifts? Explain how the production possibilities curve reflects the law of increasing opportunity costs.
c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?
d. What would production at a point outside the production possibilities curve indicate? What must occur before die economy can attain such a level of production?
a. Show these data graphically. Upon what specific assumptions is this production possibilities curve based?b. If the economy is at point C , what is the cost of two more automobiles? Of six more forklifts? Explain how the production possibilities curve reflects the law of increasing opportunity costs.
c. If the economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forklifts, what could you conclude about its use of its available resources?
d. What would production at a point outside the production possibilities curve indicate? What must occur before die economy can attain such a level of production?
Explanation
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a)Production possibility curve shows dif...
Macroeconomics 2nd Edition by Campbell McConnell ,Stanley Brue,Sean Flynn
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