possibility capital goods consumption goods\na 0 60\nb 2 55\nc 4 45\nd 6 25\ne 8 0\nthe table above presents…
possibility capital goods consumption goods\na 0 60\nb 2 55\nc 4 45\nd 6 25\ne 8 0\nthe table above presents the production possibilities frontier for a nation. using the information in the table, when moving from possibility a to b to c to ultimately e, the cost of a unit of capital goods in terms of consumption goods\ndecreases.\nremains the same.\nincreases.\ndecreases from possibility a to c, and then increases from possibility c to d.\ncannot be calculated.
Answer
Explanation:
Step1: Calculate opportunity - cost from A to B
The increase in capital goods from A to B is $2 - 0=2$, and the decrease in consumption goods is $60 - 55 = 5$. So the opportunity - cost of one unit of capital goods is $\frac{5}{2}=2.5$ consumption goods.
Step2: Calculate opportunity - cost from B to C
The increase in capital goods from B to C is $4 - 2 = 2$, and the decrease in consumption goods is $55 - 45=10$. So the opportunity - cost of one unit of capital goods is $\frac{10}{2}=5$ consumption goods.
Step3: Calculate opportunity - cost from C to D
The increase in capital goods from C to D is $6 - 4 = 2$, and the decrease in consumption goods is $45 - 25 = 20$. So the opportunity - cost of one unit of capital goods is $\frac{20}{2}=10$ consumption goods.
Step4: Calculate opportunity - cost from D to E
The increase in capital goods from D to E is $8 - 6 = 2$, and the decrease in consumption goods is $25 - 0 = 25$. So the opportunity - cost of one unit of capital goods is $\frac{25}{2}=12.5$ consumption goods.
Answer:
increases.