9. Consider following graph. (5 points) sweaters 200 180 140 t 120 t 100 · 80---

Question

9. Consider following graph. (5 points) sweaters 200 180 140 t 120 t 100 · 80----U 60 40 20 20 40 60 80 100 120 140 160 180 apes The bowed outward shape of the production possibilities curve indicates that opportunity cost of apples in terms of sweaters is..............? Which point(s) on the graph is(are) efficient production possibilities? Which point(s) on the graph show unemployment of resources? Which point(s) on the graph is(are) unattainable given current resources and technology? What is the opportunity cost of moving from point T to point R? a. b. c. d. e.

Explanation / Answer

a. Answer: Increasing

Explanation: The shape of the production possibilities curve is concave to the origin. This means there is increasing opportunity cost.

b. Q, R, U, V

Explanation: The points on the production possibilities curve are the efficient production possibilities.

c. T, W

Explanation: These points are inside the production possibilities curve, which means there are still unemployed resources in the economy. So, the economy is not operating at its efficient level.

d. S, X

Explanation: These points are outside the production possibilities curve. So, the economy does not have enough capacity or resources to attain this production level.

e. Zero

Explanation: By moving from T to R, the economy can increase production of sweaters without decreasing production of apples. So, there is zero opportunity cost.

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