4. Opportunity cost and production possibilities Nick is a skilled toy maker who is able to produce both boats and puzzles. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time. Hours Producing Produced Choice (Boats) (Puzzles) (Boats) (Puzzles) A 8. 4. B 6 2 11 4 2. 16 D 2 6 1 19 E 8 20 On the following graph, use the blue points (circle symbol) to plot Nick's initial production possibilities frontier (PPF). (? 30 25 Initial PPF 20 New PPF 10 5 3 4 6 7 8 BOATS Suppose Nick is currently using combination D, producing one boat per day. His opportunity cost of producing a second boat per day is v per day. Now, suppose Nick is currently using combination C, producing two boats per day. His opportunity cost of producing third boat per day is v per day. From the previous analysis, you can determine that as Nick increases his production of boats, his opportunity cost of producing one more boat Suppose Nick buys a new tool that enables him to produce twice as many boats per hour as before, but doesn't affect his ability to produce puzzles. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more boats per hour, Nick's opportunity cost of producing puzzles is v it was previously. PUZZLES
4. Opportunity cost and production possibilities Nick is a skilled toy maker who is able to produce both boats and puzzles. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time. Hours Producing Produced Choice (Boats) (Puzzles) (Boats) (Puzzles) A 8. 4. B 6 2 11 4 2. 16 D 2 6 1 19 E 8 20 On the following graph, use the blue points (circle symbol) to plot Nick's initial production possibilities frontier (PPF). (? 30 25 Initial PPF 20 New PPF 10 5 3 4 6 7 8 BOATS Suppose Nick is currently using combination D, producing one boat per day. His opportunity cost of producing a second boat per day is v per day. Now, suppose Nick is currently using combination C, producing two boats per day. His opportunity cost of producing third boat per day is v per day. From the previous analysis, you can determine that as Nick increases his production of boats, his opportunity cost of producing one more boat Suppose Nick buys a new tool that enables him to produce twice as many boats per hour as before, but doesn't affect his ability to produce puzzles. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more boats per hour, Nick's opportunity cost of producing puzzles is v it was previously. PUZZLES
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please help me by constructing the graph and answering the related questions for this
Transcribed Image Text:4. Opportunity cost and production possibilities
Nick is a skilled toy maker who is able to produce both boats and puzzles. He has 8 hours a day to produce toys. The following table shows the daily
output resulting from various possible combinations of his time.
Hours Producing
Produced
Choice
(Boats) (Puzzles)
(Boats)
(Puzzles)
A
8.
4.
B
6
2
11
4
2.
16
D
2
6
1
19
E
8
20
On the following graph, use the blue points (circle symbol) to plot Nick's initial production possibilities frontier (PPF).
(?
30
25
Initial PPF
20
New PPF
10
5
3
4
6
7
8
BOATS
Suppose Nick is currently using combination D, producing one boat per day. His opportunity cost of producing a second boat per day is
v per day.
Now, suppose Nick is currently using combination C, producing two boats per day. His opportunity cost of producing
third boat per day is
v per day.
From the previous analysis, you can determine that as Nick increases his production of boats, his opportunity cost of producing one more boat
Suppose Nick buys a new tool that enables him to produce twice as many boats per hour as before, but
doesn't affect his ability to produce puzzles.
Use the green points (triangle symbol) to plot his new PPF on the previous graph.
Because he can now make more boats per hour, Nick's opportunity cost of producing puzzles is
v it was previously.
PUZZLES
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