The table below shows the maximum amount of civilian goods that an economy can produce for each level of military goods produced.

Point	Military Goods (thousands of tonnes)	Civilian (thousands of tonnes)
A	0	60
B	2	55
C	4	48
D	8	39
E	10	28
F	12	15
G	14	0

1. Graph the PPC for this economy.
2. If the economy is producing at point D, what is the opportunity cost of producing an additional 2 thousand tonnes of military goods?
3. If the economy is producing at point E, what is the opportunity cost of producing an additional 2 thousand tonnes of military goods?
4. Does the PPC satisfy the principle of increasing opportunity cost?

Question 2

Adam is in the middle of building a new concert venue in LA. The land and the initial construction materials have already been purchased and the framing has already been completed at a cost of $2 million. It will cost another $4 million to complete the project. Unfortunately, a new study suggests that demand for concert tickets is down and that competition from the Capitol Centre is expected to increase. Adam argues that he’s already spent $2 million and might as well complete the project. Is Adam mistaken? If so, how would you categorize any fault in his thinking?

Answer rating: 100% (QA)

a b Consider that the economy is producing at D To produce 2 thousands tonnes of military goods ie t... View the full answer