Sjust how these information graphically. Upon what specific assumptions is this manufacturing possibilities curve based?

The curve is based upon the assumptions of complete employment, resolved sources, resolved technology, and also 2 goods.

You are watching: B. if the economy is at point c, what is the (opportunity) cost of 2 more automobiles?

b. If the economy is at suggest C, what is the expense of an additional automobile? Of another forklift? Explain how the production possibilities curve reflects the regulation of enhancing chance costs.

One more automobile would expense 4.5 forklifts (2 automobiles = 9 forklifts).

One even more forklift would cost 1/3 automobiles (6 forklifts = 2 automobiles.

The regulation of raising opportunity prices might be reflected as follows: Producing the first 2 automobiles just expenses 3 forklifts; the next two expense 6 forklifts; and so forth. Producing the last two automobiles would expense twelve forklifts; demonstrating that each added car costs more than the previous one.

c. If the economy characterized by this production possibilities table and curve were developing 3 automobiles and also 20 fork lifts, what could you conclude about its usage of its obtainable resources?

The economy’s sources are not fully employed.

d. What would certainly manufacturing at a suggest outside the production possibilities curve indicate? What must happen prior to the economic situation deserve to achieve such a level of production?

Producing outside the curve is not feasible. To reach a level of manufacturing beyond an existing curve would require growth of the curve by enhancing the quantity or top quality of sources, or by proceeding modern technology.

e. Suppose improvement occurs in the innovation of producing forklifts but not in the modern technology of creating automobiles. Draw the brand-new manufacturing possibilities curve. Now assume that a technological advancement occurs in creating automobiles yet not in developing forklifts. Draw the brand-new production possibilities curve. Now attract a production possibilities curve that mirrors technological advancement in the production of both items.

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