Chapter 2: Q 2.4 (page 27)
Explain why the economy faces a trade-off between consumption goods and capital goods.
Because the opportunity cost of making a consumer good will lead to a loss in the making of capital goods and viceversa.
Over 30 million students worldwide already upgrade their learning with Vaia!
All the tools & learning materials you need for study success - in one app.
Get started for free
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.
In response to Senator Creighton’s statement reported in Problem 2-10, Senator Long replies, “We must remain at our current production combination if we want to be able to produce more consumption goods in the future.” Of the labeled points on the diagram, which one could depict the future production combination Senator Long has in mind?
If the U.N. follows through on a proposal to add production targets for 148 more items to its Sustainable Development Goals, why might we expect that the opportunity cost in terms of other goods and services that must be forgone could be even greater? Explain briefly.
Define opportunity cost. What is your opportunity cost of attending a class at 11:00 A.M.? How does it differ from your opportunity cost of attending a class at 8:00 A.M.?
Suppose that in Fig 2-2, the nation currently is producing combination D in the table and on the graph of the production possibilities curve. What is the opportunity cost of producing 20 million more tablet devices and moving to production combination F?
What do you think about this solution?
We value your feedback to improve our textbook solutions.
