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. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods _____ because of _____.

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. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods _____ because of _____.

Quizplus · Accepted Answer

According to the production possibilities table, as the economy produces more capital goods, the opportunity cost of sacrificing units of consumption goods increases. This is due to the law of increasing costs, which states that as an economy specializes more in one good, the opportunity cost of producing additional units of that good increases. Therefore, choice (C) is the correct answer. Choices (A), (B), and (D) are incorrect because they suggest that the opportunity cost decreases or remains constant, which is not supported by the table or the law of increasing costs.

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