A

B

C

D

E

Capital goods
0

1

2

3

4

Consumption goods
25

23

19

13

0

Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:

Question

	A	B	C	D	E
Capital goods	0	1	2	3	4
Consumption goods	25	23	19	13	0

Suppose an economy is faced with the production possibilities table shown in Exhibit 2-10. As additional units of capital goods are being produced, the number of consumption goods produced must:

Quizplus · Accepted Answer

CThe production possibilities table illustrates the trade-off between producing capital goods and consumption goods. As more capital goods are produced, fewer resources are available for the production of consumption goods, leading to a decrease in their production. This is due to the finite nature of resources (D) and the law of increasing costs (C), which states that producing more of one good will lead to increasing opportunity costs in terms of the other good.