The table below shows the various possible combinations of military and civilian goods produced by a country, using the available resources and technology. Use the table to answer the questions that follow.
Military goods (in toons)
Civilian goods (in toons)
0
200
20
160
40
120
60
80
80
40
100
0
(a) Draw the production possibility curve (PPC). (b) Indicate points S and K at which production is not feasible. (c) Indicate points M and N at which resources are not efficiently utilized. (d) What does the downward slope of the PPC indicate? (e) Why is production not feasible at points S and K?
Explanation
(b) Any 2 points outside the PPC labelled S and K (c) Any 2 points inside the PPC labelled M and N (d) The downward slope of the PPC indicates that there is an opportunity cost of producing more of one type of commodity and less of the other due to limited re-sources and technical know-how. (e) Production at points S and K is not feasible due to the limited available resources and technology.Note: Military or civilian goods can be on either of the axis.
