6. The table below is a set of hypothetical production possibilities for a nation.

Question

Combination Automobiles(thousands) Beef (thousands of tons)
A 0 10
B 2 9
C 4 7
D 6 4
E 8 0

a) Plot the production possibility data. What is the opportunity cost of the first 20000 cars produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest?

c) Does this production possibilities curve reflect the law of increasing opportunity cost? Explain.

d) What assumptions could be changed to shift the production possibilities curve?

Answer 1

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