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Ah-Hong realizes that he can't finish preparing for both Economics and Accounting before the midterm. After evaluating, he concludes that if he spends all his time on Economics, he can score 90 points, but get 0 in Accounting. Conversely, if he spends all his time on Accounting, he can score 85 points, but get 0 in Economics. (a) Plot the production possibility frontier (PPF) with Economics score on the horizontal axis and Accounting score on the vertical axis. (b) Using the concept of opportunity cost, explain the significance of the PPF being concave towards the upper right. (c) Now assume the PPF is a straight line. What is the opportunity cost of increasing the Economics score by 1 point?

Ah-Hong realizes that he can't finish preparing for both Economics and Accounting before the midterm. After evaluating, he concludes that if he spends all his time on Economics, he can score 90 points, but get 0 in Accounting. Conversely, if he spends all his time on Accounting, he can score 85 points, but get 0 in Economics. (a) Plot the production possibility frontier (PPF) with Economics score on the horizontal axis and Accounting score on the vertical axis. (b) Using the concept of opportunity cost, explain the significance of the PPF being concave towards the upper right. (c) Now assume the PPF is a straight line. What is the opportunity cost of increasing the Economics score by 1 point?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Ah-Hong realizes that he can't finish preparing for both Economics and Accounting before the midterm. After evaluating, he concludes that if he spends all his time on Economics, he can score 90 points, but get 0 in Accounting. Conversely, if he spends all his time on Accounting, he can score 85 points, but get 0 in Economics. (a) Plot the production possibility frontier (PPF) with Economics score on the horizontal axis and Accounting score on the vertical axis. (b) Using the concept of opportunity cost, explain the significance of the PPF being concave towards the upper right. (c) Now assume the PPF is a straight line. What is the opportunity cost of increasing the Economics score by 1 point?
Transcribed Image Text:Ah-Hong realizes that he can't finish preparing for both Economics and Accounting before the midterm. After evaluating, he concludes that if he spends all his time on Economics, he can score 90 points, but get 0 in Accounting. Conversely, if he spends all his time on Accounting, he can score 85 points, but get 0 in Economics. (a) Plot the production possibility frontier (PPF) with Economics score on the horizontal axis and Accounting score on the vertical axis. (b) Using the concept of opportunity cost, explain the significance of the PPF being concave towards the upper right. (c) Now assume the PPF is a straight line. What is the opportunity cost of increasing the Economics score by 1 point?
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