Paper 1 · opportunity cost / production possibility
What is the opportunity cost to a fully employed economy of increasing capital investment?
Afall in present income
Bfall in present consumption
Crise in present saving
Drise in the present rate of interest
Explanation: In a fully employed economy, increasing capital investment requires diverting resources away from producing consumer goods, resulting in a fall in present consumption.
ZIMSEC Economics Paper 1, June 2009, Q1
