Calculate the opportunity cost of additional capital of terms of fewer consumption goods at points A, B, C, and D   Capital Goods: 0 10 20 30 40 Consumption: 100 90 70 40 0

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In economic terms, the opportunity cost of something is the value (or the amount) of things that you give up in order to have that thing.  In the scenario you present in this question, we can have capital goods or consumer goods.  If we want to have more consumer goods,...

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In economic terms, the opportunity cost of something is the value (or the amount) of things that you give up in order to have that thing.  In the scenario you present in this question, we can have capital goods or consumer goods.  If we want to have more consumer goods, we have to give up some capital goods.  When we get more consumer goods, our opportunity cost is the number of capital goods that we have to give up in order to get those additional consumer goods.

In order to find the exact opportunity costs of getting more capital goods, we have to use the numbers that you have given us.  When we move from having 0 units of capital goods to 10 units, we gain 10 units of capital goods but we lost 10 units of consumer goods.  Thus, our opportunity cost is one unit of consumption for each unit of capital goods.  When we move from 10 to 20 units of capital goods, we once again gain 10 units of capital goods, but this time we lose 20 units of consumer goods (we go from 90 to 70).  Now, our opportunity cost is 2 units of consumer goods for each new unit of capital goods.  When we move from 20 to 30 units of capital goods, we again gain 10 units of such goods, but we lose 30 units of consumption (we go from 70 to 40).  Now our opportunity cost is 3 units of consumer goods for every new unit of capital goods.  Finally, we gain 10 more units of capital goods when we go from 30 to 40 units, but this time we lose 40 units of consumer goods.  Here, our opportunity cost is 4 units of consumer goods for each unit of capital goods.  These are the opportunity costs of getting more capital goods, stated in terms of the amount of consumption that we have to forego in order to get those additional units of capital goods.

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