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Additional Problem 1 : PPCs (Answer Key) Suppose Jane’s production possibility frontier (PPF) for corn and cloth is initially described in the following table: Possibility Corn (1 lbs./month) Cloth (yds/month) A 20 0 B 18 1 C 15 2 D 11 3 E 6 4 F 0 5 a) Draw Jane’s PPF and explain what this curve represents. PPF represents maximum or full production possible from utilization of all resources to produce various combinations of corn and/or cloth. (point in time; full employment of all resources) b) Determine the opportunity costs associated with moving from point A to point B, B to C, C to D, D to E, and E to F. Are the opportunity costs you determined increasing, decreasing, or constant? Explain your answer. Opportunity Costs Move A Î B 2 Corn Move B Î C 3 Corn Move C Î D 4 Corn Increasing opportunity Move D Î E 5 Corn costs Move E Î F 6 Corn PPF A (0,20) B (1,18) C (2,15) D (3,11) E (4,6) F (5,0) 0 2 4 6 8 10 12 14 16 18 20 012345 Cloth (yds/mo) Corn (lbs/mo)

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2 c) Now, assume that a change in weather conditions enables Jane to produce higher yields of corn as shown below:
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