Homework (Ch 02)ChoiceDRUMSABCDE30252010500Hours Producing(Cars)(Drums)80621420On the following graph, use the blue points (circle symbol) to plot Sam's initial production possibilities frontier (PPF).24368CARS(Cars)4321Produced05(Drums)011161962078Initial PPF(+New PPF Suppose Sam is currently using combination D, producing one car per day. His opportunity cost of producing a second car per day isper day.Now, suppose Sam is currently using combination C, producing two cars per day. His opportunity cost of producing a third car per day isper day.From the previous analysis, you can determine that as Sam increases his production of cars, his opportunity cost of producing one more carSuppose Sam buys a new tool that enables him to produce twice as many cars per hour as before, but it doesn't affect his ability to produce drums.Use the green points (triangle symbol) to plot his new PPF on the previous graph.Because he can now make more cars per hour, Sam's opportunity cost of producing drums isit was previously.

Opportunity cost refers to the sacrifice of the second best alternative when one particular…

Choice DRUMS A B C D E 30 25 20 15 10 5 0 0 On the following graph, use the blue points (circle symbol) to plot Sam's initial production possibilities frontier (PPF). + Hours Producing (Cars) (Drums) 8 0 6 2 1 4 2 0 f 2 4 3 6 8 4 CARS Produced (Cars) (Drums) 4 0 3 11 2 16 1 0 5 19 6 20 7 8 Initial PPF New PPF

Choice DRUMS A B C D E 30 25 20 15 10 5 0 0 On the following graph, use the blue points (circle symbol) to plot Sam's initial production possibilities frontier (PPF). + Hours Producing (Cars) (Drums) 8 0 6 2 1 4 2 0 f 2 4 3 6 8 4 CARS Produced (Cars) (Drums) 4 0 3 11 2 16 1 0 5 19 6 20 7 8 Initial PPF New PPF

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1: Production Possibilities Frontier Consider an economy that produces bicycles and autos. The production possibilities schedule shown below denotes the points on the production possibilities frontier. Points Amount Bicycles Amount Autos A 10 B 8 D E 5 8 12 14 15 a) Draw the production possibilities frontier in a clearly labelled graph. You can assume the points on the frontier are connected by straight lines. Please put bicycles on the x-axis and autos on the y-axis. b) Is point E more efficient in production than point C? Explain. c) Based on this production possibility frontier, can the economy currently produce 8 bicycles and 10 autos? If not, explain what would need to happen to allow the economy to produce 8 bicycles and 10 autos. d) True/False/Uncertain (and explain): Point B more efficient in allocation than point A. e) Does this production frontier have increasing opportunity costs? Explain, and also explain why it is common for production frontiers to have increasing…
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