2 The opportunity cost of shifting production choices The fo

2. The opportunity cost of shifting production choices The following graph shows the production possibilities frontier (PPF) of an economy that produces clothing and steel. The black points (+ symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. Graph 1 16 T 14 12 10 t 0 40 0 120 180 200 240 280 320 STEEL (Thousands of tons)

Solution

Answer to blank 1: 32,000

Explanation:

When the economy moves from point A to point B, it has to forgo 32,000 tons(i.e.,200,000 - 168,000) of Steel to Produce 2,000 additional garments of clothing.

Answer to blank 2: 48,000

Explanation:

When the economy moves from point B to point C, it has to forgo 48,000 tons (i.e., 168,000 - 120,000) of Steel to Produce 2000 additional garments of clothing.

Answer to blank 3: Less than

Answer to blank 4: principle of increasing cost