Question

Hello, Im having trouble understanding the graphing/chart section of this lesson. Is there anyone who can help me understand?

Goods	A	B	C	D	E	F
Capital	5	4	3	2	1	0
Consumer	0	5	9	12	14	15

(presentation as a table rather than as a graph)

1. Using the above PPTable, if the economy is producing at alternative D, the opportunity cost of producing one more unit of capital is

A. 1 unit of consumer goods.
B.	2 units of consumer goods
C	3 units of consumer goods
D	none of the above

2. Compared to alternative D in the above table, the choice of alternative C would

A	increase future economic growth.
B	not affect future economic growth.
C	decrease future economic growth
D	none of the above

3. A total output of 3 units of capital and 4 units of consumer goods in the above table

A	is not possible.
B	results in maximum possible production for the economy
C	is an inefficient use of available resources and technology
D	none of the above.

4. In the above table, for the economy to produce a total output of 3 units of capital goods and 13 units of consumer goods, it must

A	use the available resources and technology more efficiently.
B	have additional resources or higher level of technology.
C	reach full employment.
D	none of the above.

Answer 1

Q1) The answer is (c)

As capital is increase from 2 to 3 (D to C), the conumer goods are decreased from 12 o 9, thus a 3 unit loss. This is the opportunity cost of increasing capital go by 1 unit at D

Q2) The answer is (a)

Future growth depends on capital goods and not consumer goods. Since C has more capital goods than D ( 3>2), the future growth will be higher under alternative C

Q3) The answer is (c)

the economy, opertaing at point C, can produce 3 units of capital goods and 9 units of consumer goods. Thus, if the point is 3 units of capital and 4 units of consumer goods, the production capability is not been used to the full potential and thus, there is an inefficient use of available resources and technology

Q4) The answer is (b)  

the economy, opertaing at point C, can produce 3 units of capital goods and 9 units of consumer goods. Thus, if the point is 3 units of capital and 13 units of consumer goods, either more resources are required or there has to be an improvement in technology such the PPF shifts to the right.