The table below shows the various possible combinations of military and civilian goods produced by...
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?
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Explanation
(b) Any 2 points outside the PPC labelledSandK
(c) Any 2 points inside the PPC labelledMandN
(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 pointsSandKis not feasible due to the limited available resources and technology.
Note: Military or civilian goods can be on either of the axis.