Table 3-14
The following table contains some production possibilities for an economy for a given year.

-Refer to Table 3-14.If the production possibilities frontier is bowed outward,then "?" could be
A) 340.
B) 330.
C) 320.
D) 310.

Question

Table 3-14
The following table contains some production possibilities for an economy for a given year.
 
-Refer to Table 3-14.If the production possibilities frontier is bowed outward,then "?" could be
A) 340. 
B) 330. 
C) 320. 
D) 310.

Quizplus · Accepted Answer

If the production possibilities frontier is bowed outward, it indicates that the opportunity cost of producing one good in terms of the other good is increasing. This means that the economy can produce more of one good only if it gives up increasingly larger amounts of the other good. Looking at the table, we can see that as we move from producing 0 units of consumer goods to producing 20 units, the cost in terms of capital goods is only 10 units. However, as we move from producing 20 units of consumer goods to producing 40 units, the cost in terms of capital goods increases to 20 units. This means that the greatest increase in consumer goods that can be obtained is 20 units, which would be at point D, where 40 units of consumer goods and 310 units of capital goods are produced. Therefore, the best choice(s) is D) 310.

Table 3-14 The Following Table Contains Some Production Possibilities for an Economy