Question

# The Boswell Fruit Farm produces only oranges and papaya. Table 1...

1. The Boswell Fruit Farm produces only oranges and papaya. Table 1 below shows the maximum possible output combinations of the two fruits using all resources and currently available technology. Answer the questions below and show calculations where appropriate.
(25 points)
1. Graph the Fruit Farm's production possibilities frontier. Put oranges on the horizontal axis and papayas on the vertical axis. Be sure to identify the output combination points on your diagram. (10pt)

Table 1

1. Suppose the Fruit Farm is currently producing at point F. What is the opportunity cost of producing an additional 20,000 kilos of oranges? (5pt)
2. Suppose the Fruit Farm is plagued by a maggot infestation which destroys orange trees but not papayas. Explain with a graph what happens to the PPF. (5pt)
3. Which of the possible output combinations represent the lowest opportunity cost for one kilo of papayas? Show your calculation to support your answer. (5pt)

1. The following table shows the amount of good A and good B that two countries could produce if they devoted all their resources to that good. Assume both countries have the same quantity of resources and the trade-off between good A and good B remains constant as resources are shifted from one good to another. Answer the questions below and show calculations where appropriate. (25 points)
1. Draw a straight-line PPF graph for Canada. (5pt)

1. Draw a straight-line PPF graph for India. (5pt)
2. Which country has the comparative advantage in good A?  In good B? Explain. (5pt)
3. What is India's marginal opportunity cost of producing good A?  Good B? (5pt)

Based on the data given, what is the terms of trade range for good A in terms of units of good B? (5pt)

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