Investment in capital goods is one way to increase the standard of living in the future. Investment in capital goods, however, means that we must forgo consumption today. One of the trade-offs facing an economy is the balance of consumption today with that of the future. The following table shows such a trade-off. With this information we know that the opportunity cost of which of the following is the greatest? $\begin{array}{l}
\begin{array}{|c|c|}
\hline\text { Current consumption } & \text { Future consumption }\
\hline 800 & 100 \
\hline 750 & 260 \
\hline 650 & 340 \
\hline 600 & 380 \
\hline 550 & 400 \
\hline
\end{array}
\end{array}$

Question

Quizplus · Accepted Answer

The opportunity cost is greatest when increasing current consumption from 750 to 800, as future consumption decreases from 260 to 100, a loss of 160 units, which is the largest decrease compared to other options.

Investment in Capital Goods Is One Way to Increase the Standard