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Chapter 2: Q 11 (page 46)

In response to Senator Creighton鈥檚 statement reported in Problem 2-10, Senator Long replies, 鈥淲e must remain at our current production combination if we want to be able to produce more consumption goods in the future.鈥� Of the labeled points on the diagram, which one could depict the future production combination Senator Long has in mind?

Short Answer

Expert verified

Point D is the future production combination Senator Long has in mind.

Step by step solution

01

Step 1. Given Information

The graph for the capital goods and the consumer goods is,

02

Step 2. Point.

Point D is the future production combination Senator Long has in mind because that is the unattainable point in the current situation.

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Most popular questions from this chapter

Construct a production possibilities curve for a nation facing increasing opportunity costs for producing food and video games. Show how the PPC

changes have given the following events.

(a) A new and better fertilizer is invented.

(b) Immigration occurs, and immigrants鈥� labor can be employed in both the agricultural sector and the video game sector.

(c) A new programming language is invented that is less costly to code and is more memory-efficient, enabling the use of smaller game cartridges.

(d) A heat wave and drought result in a 10 percent decrease in usable farmland.

The following table illustrates the points a student can earn on examinations in economics and biology if the student uses all available hours for study. Plot this student鈥檚 production possibilities curve. Does the PPC illustrate the law of increasing additional costs?

EconomicsBiology
10040
9060
8075
7085
6093
5098
40100

A nation鈥檚 residents can allocate their scarce resources either to producing consumer goods or to producing human capital鈥攖hat is, providing themselves with training and education. The following table displays the production possibilities for this nation:

Production CombinationUnits of Consumer GoodsUnits of Human Capital
A0100
B1097
C2090
D3075
E4055
F5030
G600

(a) Suppose that the nation鈥檚 residents currently produce combination A. What is the opportunity cost of increasing the production of consumption goods by 10 units? By 60 units?

(b) Does the law of increasing additional costs hold true for this nation? Why or why not?

During a debate on the floor of the U.S. Senate, Senator Creighton states, 鈥淥ur nation should not devote so many of its fully employed resources to producing capital goods because we already are not producing enough consumption goods for our citizens.鈥� Compared with the other labeled points on the diagram, which one could be consistent with the current product combination choice that Senator Creighton believes the nation has made?

Senator Borman interjects the following comment after the statements by Senators Creighton and Long reported in Problems 2-10 and 2-11: 鈥淚n fact, both of my esteemed colleagues are wrong, because an unacceptably large portion of our nation鈥檚 resources is currently unemployed.鈥� Of the labeled points on the diagram, which one is consistent with Senator Borman鈥檚 position?
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