Upon what specific assumptions is this production possibilities curve based? Inv

Question

Upon what specific assumptions is this production possibilities curve based? Investment, entrepreneurial ability, and full employment O Land, labor capital and entrepreneurial ability 0 Full employment, fixed supplies of resources, fixed technology, and two goods Land, full employment, fixed technology. and two goods b. lf the economy is at point C, what is the (opportunity) cost of 2 more automobiles? What is the (opportunity) cost of 6 more forklifts? 20-tor oble (s) Which characteristic of the production possibilities curve reflects the law of increasing opportunity costs: its shape or its economy characterized by this production possibilities table and curve were producing 3 automobiles and 20 forkilifts, what could you conclude about its use of available resources? The economy is Teick o its availabie resources d is production at a point outside the production possibilities curve currenty possibie? Could a future advance in tecnnoiogy allow production beyond the curent production possibilities curve? a allow s country to consume beyond its current production possiblities curve?

Explanation / Answer

a) PPF has been plotted correctly.

Full employment, fixed supplies of resources, fixes technology and two goods- correct.

b) opportunity cost of producing two more automobiles if the economy is at C= 21-12=9 forklifts.

opportunit cost of producing 6 more forklifts= 4-2= 2 automobiles.

c) the economy is not fully utilising resources.

As the given combination lies below PPF.

d) No

We need more resources or better technology to produce outside PPF.

Yes

Better technology will shift PPF outwards.

Yes

International trade results in gain in consumption.

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