Question

Table 2: Market Quantity Supplied and Demanded Data for Good X Market Quantity Quantity Prices | Supplied Demanded P) (O) (od S4.00 4 10 $5.00 6 8 S6.00 $7.00 10 $8.00 12 Exhibit 2.4: Fim X's Points of Production on Iis PPF Points ABCD Capital Goods (K) 30,00 27.00 21.00 12.000.00 Consumption Goods (C) 0.00 10.00 20.00 | 30.00 40.00 4) Refer to Exhibit 2-4. In moving production allocations from points D to B on the Production Possibilities Frontier or Curve (PPF or PPC), the opportunity cost of production at Point B is_ unit(s) of _goods, respectively A) 15; capital B) 20; consumption C) 20; capital D) 15; consumption of unit(s), 5) Refer to Table 2 for the market of a normal good. At the market price (P) of $5.00, there is a respectively. A) surplus; 6 B) shortage; 8 C) surplus; 2 D) shortage; 2

Answer 1

4)

In moving production allocations from points D to B on the PPC, the opportunity cost of production at point B is 20 units of consumption goods, respectively.

Correct option is B

Opportunity cost is the reduction in the quantity of a good when resources are shifted from the production of this good to the production of some other good.

In moving production allocations from points D to B on the PPC, production of consumption goods falls from 30 units to 10 units, thereby decreasing by 20 units

5)

At market price of $5, quantity supplied is 6 units and quantity demanded is 8 units.

Since quantity demanded is more than quantity supplied, hence there is shortage of goods.

Shortage = Quantity demanded - Quantity supplied

= 8 - 6

= 2 Units

Correct option is D

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