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Unformatted text preview: the graph will show that increasing production of one good will lead to the reduction of production another good due to limited amount of resources. This is known as the opportunity costs which will be the amount of the other which we must go to increase a good by one unit. We will make the choice which offers us the lowest amount of opportunity cost. Summarize your findings for part B. Describe what would happen to the PPF if the supply of tomatoes increased because of good weather, and if the supply of tomatoes decreased because of bad weather. The PPF will shift outwards when supply of tomatoes increase because of good weather as such the maximum combination of goods which the economy can produce will increase. When the supply decreases due to bad weather, PPF will shift inwards as such maximum combination of goods which the economy can produce will decrease....
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This note was uploaded on 09/20/2010 for the course ANM 8739 taught by Professor Morgan during the Spring '10 term at Alabama A&M University.
- Spring '10