“Because resources are scarce, the production of more capital goods means that fewer resources are available to produce consumption goods, so there is less current consumption.” Do you agree or disagree? Explain.

What will be an ideal response?

ANSWER:

Agree. Capital goods are goods that are used to produce other goods rather than for the sake of current consumption. The resources used to make capital goods are not available to produce current consumption goods, so there is less current consumption.