The production possibilities table below shows the hypothetical relationship between the production of capital goods and consumer goods in an economy.ProductsProduction Possibilities?ABCDECapital Goods01234Consumer Goods22181370Refer to the table above. What is the opportunity cost of producing the first two units of capital goods?
A. 6 units of consumer goods
B. 9 units of consumer goods
C. 13 units of consumer goods
D. 22 units of consumer goods
Answer: B
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(a) Exports. (b) Taxation. (c) Investment. (d) Externalities.
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A pair of running shoes costs $70 in the U.S. If the price of the same shoes is 4500 rupees in India and the exchange rate is 60 rupees per dollar, than the real exchange rate is
a. more than 1, so a profit could be made by buying these shoes in the U.S. and selling them in India. b. more than 1, so a profit could be made by buying these shoes in India and selling them in the U.S. c. less than 1, so a profit could be made by buying these shoes in the U.S. and selling them in India. d. less than 1, so a profit could be made by buying these shoes in India and selling them in the U.S.