Answer
One more automobile would cost 2.25 forklifts. One more forklift would cost 4/21 automobiles. The shape of the production possibilities curve reflects the law of increasing opportunity costs.
Work Step by Step
At point C, there are 4 automobiles and 21 forklifts. Point A shows that the maximum attainable amount of forklifts (with no automobiles) is 30. 30-21=9, so there are 9 forklifts sacrificed to make the 4 automobiles of point C. 9/4= 2.25, so at point C, one more automobile made would cost 2.25 forklifts. This is expressed as a decimal and not rounded to a whole number because while forklifts themselves must be whole numbers, their cost can vary based on fraction - we are looking at the resource costs making one forklift, multiplied by 2.25.
Point E shows that the maximum attainable amount of automobiles (with no forklifts) is 8. 8-4=4, so there are 4 automobiles sacrificed to make the 21 forklifts of Point C. 4/21 represents the value of each forklift relative to automobiles, so at point C, one more forklift made would cost 4/21 automobiles. The bowed out shape of the production possibilities curve represents the law of increasing opportunity costs.
