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1. Here is the production possibilities table for war goods and civilian goods:
______Production Alternative______
Types of Production A B C D E
Automobiles
0
2
4
6
8
Missiles
30
27
21
12
2. Referring again to the production possibilities curve above:
a. Improvement occurs in the technology of producing missiles but not in the technology of producing automobiles. Draw the new production possibilities curve.
b. Now assume that a technological advance occurs in producing automobiles but not in producing missiles. Draw the new production possibilities curve.
c. Now draw a production possibilities curve that reflects technological improvements in the production of both products.
Opportunity Cost Review:
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