Question

If the economy is at point C, what is the cost of one more automobile? Of one more forklift? Explain how the production possibilities curve reflects the law of increasing opportunity costs.

Answer 1

Answer:

A) At point C, 2 automobiles will equal 9 forklifts. Therefore, an extra automobile would cost 4 and a half forklifts.

B) Also, because 6 forklifts equal 2 automobiles,  an additional forklift would cost 1/3 automobiles

 

Explanation:

It only costs 3 forklifts to manufacture the first two cars; the next pair comes at a cost of 6 forklifts. Therefore, it will cost a dozen forklifts to manufacture the last 2 automobiles. This demonstrates that every extra car produced comes at a greater cost than the one before.

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