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Chapter 2: Q 14 (page 46)

Like physical capital, human capital produced in the present can be applied to the production of future goods and services. Consider the table in Problem 2-13, and suppose that the nation鈥檚 residents are trying to choose between combination C and combination F. Other things being equal, will the future production possibilities curve for this nation be located farther outward if the nation chooses combination F instead of combination C? Explain.

Short Answer

Expert verified

No, the production possibilities curve for the nation will not be located farther outward if the nation chooses combination F instead of combination C.

Step by step solution

01

Step 1. Given Information.

The data for the units of consumer goods and units of human capital is as follows:

Production CombinationsUnits of Consumption GoodsUnits of Human Capital
A0100
B1097
C2090
D3075
E4055
F5030
G600
02

Step 2. Reason.

No, the production possibilities curve for the nation will not be located farther outward if the nation chooses combination F instead of combination C. The combination C produces 90 units of human capital which are farther to the right than combination F which produces 30 units of human capital.

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Most popular questions from this chapter

After the concert discussed in Problems, 2-3 is over and you and your friend are traveling home, you discuss how each of you might otherwise have used the four hours devoted to attending the concert. The four hours could have been used to study, watch a sporting event on TV, or get some extra sleep. Your friend decides that if she had not spent four hours attending the concert, she would have chosen to study, and you reply that you otherwise would have watched the televised sporting event. Identify the relevant opportunity costs for you and your friend for allocating your four hours to attending the concert. Explain briefly.

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