Exhibit 2-8 Production possibilities frontier data

-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-8.The second unit of capital goods production will cost _____ units of consumption goods and the third unit of capital goods production will cost _____ units of consumption goods.

Question

Exhibit 2-8 Production possibilities frontier data
 
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2-8.The second unit of capital goods production will cost _____ units of consumption goods and the third unit of capital goods production will cost _____ units of consumption goods.

Quizplus · Accepted Answer

To produce the second unit of capital goods, the economy must give up 4 units of consumption goods. To produce the third unit of capital goods, the economy must give up an additional 6 units of consumption goods. Therefore, the answer is A.

Exhibit 2-8 Production Possibilities Frontier Data