Chapter 1: Introduction to Economics Scarcity, Choice & Opportunity Cost (Blog Challenge)

Blog Challenge Question: The choice between investing in capital goods and producing consumer goods now affects the ability of an economy to produce in the future. Using at least one example of such economies, explain this statement. You may support your answer with PPC graphs and do use relevant articles/videos/data/graphical illustrations.

Our group is using Singapore's economy as an example.
Firstly, capital goods are man-made aids to production which are used in the future but not for immediate usage. An example of capital goods are machinery and equipment used to produce consumer goods. A clear definition of capital goods is in these links below.

Links: http://articles.economictimes.indiatimes.com/keyword/capital-goods
           http://articles.latimes.com/keyword/capital-goods
Secondly, consumer goods is defined as goods that are created for final consumption for the consumers, which are typically used by households. Examples of consumer goods are food, daily necessities, entertainment. They are produced also as a form of investing capital. A clear definition of consumer goods is in this link below.

Link: http://www.investopedia.com/terms/c/consumer-goods.asp

The Singapore economy has to make a choice on whether to invest more in either the capital goods or consumer goods that benefits the economy. These choices are to be made based on the consumer's demand for consumer goods. In the long run, investing in capital goods would be a wiser choice as more consumer goods would be produced for the larger scale of the economy. The link below explains basically what happens when certain points selected on the curve of the PPC.

Video Link: https://www.youtube.com/watch?v=b4ZTGU4iWvs

Therefore, the choice of producing the certain number of capital goods and consumer goods in the economy results in different outcomes depending on the amount of capital goods and consumer goods are produced.