Narrbegin Exhibit 2.8 Production possibilities frontier data
$\begin{array}{|l|r|r|r|r|r|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Consumption goods } & 25 & 23 & 19 & 13 & 0 \
\hline
\end{array}$ Narrend
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2.8. The first unit of capital goods will cost the economy _____ units of consumption goods.

Question

Narrbegin Exhibit 2.8 Production possibilities frontier data
 $\begin{array}{|l|r|r|r|r|r|}
\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \
\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \
\hline \text { Consumption goods } & 25 & 23 & 19 & 13 & 0 \
\hline
\end{array}$ Narrend
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2.8. The first unit of capital goods will cost the economy _____ units of consumption goods.

Quizplus · Accepted Answer

Moving from point A to point B on the production possibilities frontier, the economy increases its production of capital goods from 0 to 1. This increase in capital goods production results in a decrease in consumption goods production from 25 to 23 units. Therefore, the cost of the first unit of capital goods is the reduction in consumption goods, which is 25 - 23 = 2 units of consumption goods.

Narrbegin Exhibit 2 Narrend -Suppose an Economy Is Faced with the Production Possibilities

Narrbegin Exhibit 2 Narrend
-Suppose an Economy Is Faced with the Production Possibilities