Draw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F. Option missiles butter A 0 30 B 1 28 C 2 24 D 3 18 E 4 10 F 5 0 What is the opportunity cost of increasing butter production from 18 – 24 units? What is the maximum amount of butter that can be produced, if all resources are devoted to butter production? Can this country produce 2 missiles and 10 units of butter? Yes or no? Where would this point lie relative to the PPF? Suppose the information given in question 2 represents the PPF1. Draw a new PPF diagram and illustrate what happens when the missile sector experiences an increase in new resources and technology. Show both PPF1 and PPF2 on your graph.
Draw a production possibilities frontier (
Option missiles butter
A 0 30
B 1 28
C 2 24
D 3 18
E 4 10
F 5 0
- What is the
opportunity cost of increasing butter production from 18 – 24 units? - What is the maximum amount of butter that can be produced, if all resources are devoted to butter production?
- Can this country produce 2 missiles and 10 units of butter? Yes or no? Where would this point lie relative to the PPF?
Suppose the information given in question 2 represents the PPF1. Draw a new PPF diagram and illustrate what happens when the missile sector experiences an increase in new resources and technology. Show both PPF1 and PPF2 on your graph.
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