Problem Solving : Scarcity, Choice, Opportunity Cost &Production Possibilities. 5 Points.

The following table represents a society's production possibilities schedule for two categories of goods: Capital goods and Consumer goods.

Answer the following questions:

Production Possibilities TableCombinationCapital GoodsConsumer GoodsA50B410C318D224E128F030

1. Construct a PP curve with capital goods on the horizontal axis on the graph below. (Pay attention to the shape of the curve.) (Watch the videos posted on the modules)
2. Can this nation produce 14 units of capital goods? Explain.
3. What is the opportunity cost of the first unit of capital goods?
4. What is the opportunity cost of the fifth unit of capital goods?
5. Is this table an example of increasing costs or constant costs? Why?
6. Suppose this nation is currently producing 3 units of capital goods and 6 units of consumer goods, show this point on your graph.
7. You make the call: What is happening at this point?Make a normative statement about the situation which might explain what is happening.
8. Illustrate the effect, which an improvement in the technology used to produce capital goods would have on this society's production possibilities curve. Show this on your graph
9. Suppose some of this nation's resources were destroyed in a major earthquake, show what might happen on your graph.