Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
A decrease in future production capacity due to underinvestment in capital goods.
B
An immediate increase in unemployment in the consumer goods sector.
C
A constant level of economic growth with no trade-offs.
D
A shift of the production possibilities curve outward.
Understanding the Answer
Let's break down why this is correct
Answer
When a country chooses to produce more consumer goods, like toys and clothes, instead of capital goods, such as machinery and tools, it faces an opportunity cost. This means that by focusing on consumer goods, the country gives up the chance to produce capital goods that could help improve its economy in the long run. For example, if a factory invests in making more toys today, it might not have the equipment needed to make those toys more efficiently tomorrow. As a result, while people may enjoy more consumer products now, the economy could grow slower in the future because it lacks the necessary tools and equipment to produce more goods overall. Therefore, balancing the production of both types of goods is important for sustainable growth.
Detailed Explanation
When a country focuses on making more consumer goods, it spends less on capital goods. Other options are incorrect because Some might think that making more consumer goods will cause job loss in that sector; It's a common mistake to think that focusing on one area won't affect others.
Key Concepts
Opportunity Cost
Production Possibilities Curve (PPC)
Resource Allocation
Topic
Opportunity Cost and PPC
Difficulty
medium level question
Cognitive Level
understand
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