IGCSE/GCSE/O & A Level/IB/University Student Forum
Qualification => Subject Doubts => GCE AS & A2 Level => Commerce => Topic started by: cashem'up on August 26, 2009, 12:00:06 pm
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hey guys the question of from S04
1 What is the opportunity cost to a fully employed economy of increasing capital investment?
A a fall in consumption
B a fall in income
C a rise in saving
D a rise in the rate of interest
The answer is a)....plz explain...now i can understand that the 'COST' of increasing capital investment will be fall in consumption, less consumer goods...etc but the 'OPPORTUNITY COST' shouldn the answer be something else as the opp. cost is next best alternative forgone..rite....plzz help Thanks
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If you didnt invest you could consume. That is opportunity cost.
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on tht ppt cruve ,which compares two goods .... nd shows oppurtunity costs of making one good nd not another.
in tht if u increase capital investment (capital goods)...u will see tht there will be a fall in consumption....