5. Opportunity cost and production possibilities Deborah is a talented artist who sells hand-crafted goods on her website. Deborah currently crafts and sells both crochet hats and baskets. She spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of her time is spent on each good. Hours Crafting Produced Choice (Crochet hats) (Baskets) (Crochet hats) (Baskets) A 8 0 0 B 6 2 3 10 4 2 16 D 2 6 1 19 E 0 8 0 20 On the following graph, use the blue points (circle symbol) to plot Deborah's initial production possibilities frontier (PPF). BASKETS 30 25 25 20 15 10 5 2 3 4 5 6 CROCHET HATS Initial PPF New PPF ? Suppose Deborah is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day per day. is Now, suppose Deborah is currently using combination C, producing two crochet hats per day. Her opportunity cost of producing a third crochet hat per day is per day. From the previous analysis, you can determine that as Deborah increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Deborah buys a new tool that enables her to produce twice as many crochet hats per hour as before, but it doesn't affect her ability to produce baskets. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more crochet hats per hour, Deborah's opportunity cost of producing baskets is it was previously.
5. Opportunity cost and production possibilities Deborah is a talented artist who sells hand-crafted goods on her website. Deborah currently crafts and sells both crochet hats and baskets. She spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of her time is spent on each good. Hours Crafting Produced Choice (Crochet hats) (Baskets) (Crochet hats) (Baskets) A 8 0 0 B 6 2 3 10 4 2 16 D 2 6 1 19 E 0 8 0 20 On the following graph, use the blue points (circle symbol) to plot Deborah's initial production possibilities frontier (PPF). BASKETS 30 25 25 20 15 10 5 2 3 4 5 6 CROCHET HATS Initial PPF New PPF ? Suppose Deborah is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day per day. is Now, suppose Deborah is currently using combination C, producing two crochet hats per day. Her opportunity cost of producing a third crochet hat per day is per day. From the previous analysis, you can determine that as Deborah increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Deborah buys a new tool that enables her to produce twice as many crochet hats per hour as before, but it doesn't affect her ability to produce baskets. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more crochet hats per hour, Deborah's opportunity cost of producing baskets is it was previously.
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter1: Welcome To Economics!
Section: Chapter Questions
Problem 12RQ: What is the difference between microeconomics and macroeconomics?
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Transcribed Image Text:5. Opportunity cost and production possibilities
Deborah is a talented artist who sells hand-crafted goods on her website. Deborah currently crafts and sells both crochet hats and baskets. She
spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of her time is spent on each
good.
Hours Crafting
Produced
Choice (Crochet hats) (Baskets) (Crochet hats) (Baskets)
A
8
0
0
B
6
2
3
10
4
2
16
D
2
6
1
19
E
0
8
0
20
On the following graph, use the blue points (circle symbol) to plot Deborah's initial production possibilities frontier (PPF).
BASKETS
30
25
25
20
15
10
5
2
3
4
5
6
CROCHET HATS
Initial PPF
New PPF
?
Suppose Deborah is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day
per day.
is
Now, suppose Deborah is currently using combination C, producing two crochet hats per day. Her opportunity cost of producing a third crochet hat per
day is
per day.
From the previous analysis, you can determine that as Deborah increases her production of crochet hats, her opportunity cost of producing one more
crochet hat
Suppose Deborah buys a new tool that enables her to produce twice as many crochet hats per hour as before, but it doesn't affect her ability to
produce baskets. Use the green points (triangle symbol) to plot her new PPF on the previous graph.
Because she can now make more crochet hats per hour, Deborah's opportunity cost of producing baskets is
it was previously.
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