The following is a production possibilities schedule for prisons and public educ
ID: 1148391 • Letter: T
Question
The following is a production possibilities schedule for prisons and public education. Alternative Public Education Prisons 160 120 80 40 20 U O W 40 60 80 Graph the production possibilities curve for your understanding. Do not worry about drawing the graph as a part of your answer. Answer the following: a) What is the opportunity cost of the first 20 units of public education? Of the last 20 units (from 60 to 80) of education? b) Add point F (40 units of education, 60 units of prisons). What does it represent? c) Why cannot the economy produce 60 units of education and 80 units of prisons? d) If the economy grows and the curve shifts out in the future, could the economy produce 60 units of public education and 80 units of prisons?What might cause the economy to grow? Lightshot ScreeExplanation / Answer
a) The opportunity cost of the first 20 units of public education is 40 units of prisons because to increase public education to 20 we have to give up 40 units of prison. The opportunity cost of last 20 units of public education is also 40 units of prison.
b) Point F would be an unachievable point in the economy. As the resources are limited and they can only produce a limited amount of goods. Point F even though desirable but unachievable.
c) The economy can't produce 60 units of public education 80 units of prisons because they have very limited resources. If they go for producing 60 units of education they will produce only 40 units of prison and if they go for producing 80 unit of prison they can only produce 40 units of education.
d) Yes, if the economy grows in the future they can produce 60 units of public education and 80 units of prison. A huge influx of capital or better technology or increased immigration of skilled worker can lead to such situation.
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