Question

QUESTION 4

1. What would be an example of capital good?

   		Antonio, the manager of the local Taco Hut, purchases a new deep fryer.
   		Apple sells computers to Japan.
   		Jeanette buys a new dress.
   		Rhianna gets a haircut.

2 points   

QUESTION 5

1. The production possibilities frontier is the boundary between the

   		rational and irrational choices facing a society.
   		attainable and unattainable combinations of goods and services.
   		goods and services that the economy can produce.
   		affordable and unaffordable combinations of production.

Answer 1

Q4.

Capital goods are those goods which are used in the production activities in order to produce other goods and services but are not directly consumed in the production process.

Antonio purchasing a new deep fryer for his firm is a capital good purchase as the fryer is used to produce fries, which are the final goods and meanwhile, the fryer is not directly consumed in the process.

Apple selling computers to Japan is an export activity and the computers exported may or may not be used as a capital good. Computers are consumer goods when individuals purchase them and capital goods when firms purchase them.

Jeanette buying a new dress and Rhianna getting a haircut are examples of consumer good and service respectively.

Ans: Antonio, the manager of the local Taco Hut, purchases a new deep fryer

Q5.

The production possibilities frontier denotes the maximum attainable combination of production of an economy. Therefore, the PPF demarcates the attainable and unattainable combinations of production quantities from each other.

Ans: attainable and unattainable combinations of goods and services