Narrbegin Exhibit 2 Narrend
-Suppose an Economy Is Faced with the Production Possibilities

Narrbegin Exhibit 2.8 Production possibilities frontier data
$\begin{array}{|l|r|r|r|r|r|}\hline & \text { A } & \text { B } & \text { C } & \text { D } & \text { E } \\\hline \text { Capital goods } & 0 & 1 & 2 & 3 & 4 \\\hline \text { Consumption goods } & 25 & 23 & 19 & 13 & 0 \\\hline\end{array}$ Narrend
-Suppose an economy is faced with the production possibilities table shown in Exhibit 2.8. As additional units of capital goods are produced, the opportunity cost in terms of sacrificed units of consumption goods _____ because of _____.

A) decreases; greater efficiency in production
B) increases; decreasing opportunity cost
C) increases; the law of increasing costs
D) increases; greater efficiency in production

Correct Answer:

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