Question

Please answer both questions, with an explanation

Suppose the given production possibilities frontier (PPF) graph shows the fictitious country of Ruritania currently producing at the point labeled Start. If a decision is reached to provide more public goods, to which point will Ruritania move? O D O c O B Start С What is the opportunity cost of that decision? O There is no opportunity cost since the economy is still producing on the PPF. Public goods The private goods that must be given up as resources are shifted to the public sector. There is no opportunity cost since the economy

Answer 1

Ruritania is currently producing at the point Start. If a decision is reached to provide more public goods,then Ruritania will move to point D on the PPF because point D lies on the PPF with more public good and point C is unattainable as it lies outside the PPF.

The opportunity cost of that decision is the private goods that must be given up as resources are shifted to the public sector. Hence, option(B) is correct.