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WendyEller-Assignment-Unit 2

WendyEller-Assignment-Unit 2 - Wendy Eller BU 204-02AU...

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Wendy Eller BU 204-02AU October 26, 2009 Assignment-Unit 2 Problem 1 Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fresh fish. The accompanying table shows the maximum annual output combinations of potatoes and fish that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for potato production, there are fewer resources available for catching fish. Maximum Annual Output Options Quantity of Potatoes (Pounds) Quantity of Fish (Pounds) A 1000 0 B 800 300 C 600 500 D 400 600 E 200 650 F 0 675 A. Draw a production possibility frontier with potatoes on the horizontal axis and fish on the vertical axis illustrating these options, showing points A-F. Note: See Next Page For Graph. B. Can Atlantis produce 500 pounds of fish and 800 pounds of potatoes? Explain. Where would this point lie relative to the production possibility frontier?
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No, they cannot without participating in some sort of trade. This would be outside of the production possibility frontier. C. What is the opportunity cost of increasing the annual output of potatoes from 600 to 800 pounds?
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