Maria is a talented artist who sells hand-crafted goods on her website. Maria currently crafts and sells both crochet hats and embroidered sweaters. 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) (Embroidered sweaters) (Crochet hats) (Embroidered sweaters) A B C с D E EMBROIDERED SWEATERS 30 25 15 On the following graph, use the blue points (circle symbol) to plot Maria's initial production possibilities frontier (PPF). 10 5 0 0 8 1 6 4 2 0 2 3 4 0 2 4 6 8 5 CROCHET HATS 6 7 4 3 2 1 0 8 Initial PPF New PPF 0 12 17 19 20 ? Suppose Maria is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day is per day. Now, suppose Maria 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 Maria increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Maria 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 embroidered sweaters. 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, Maria's opportunity cost of producing embroidered sweaters is previously. it was
Maria is a talented artist who sells hand-crafted goods on her website. Maria currently crafts and sells both crochet hats and embroidered sweaters. 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) (Embroidered sweaters) (Crochet hats) (Embroidered sweaters) A B C с D E EMBROIDERED SWEATERS 30 25 15 On the following graph, use the blue points (circle symbol) to plot Maria's initial production possibilities frontier (PPF). 10 5 0 0 8 1 6 4 2 0 2 3 4 0 2 4 6 8 5 CROCHET HATS 6 7 4 3 2 1 0 8 Initial PPF New PPF 0 12 17 19 20 ? Suppose Maria is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day is per day. Now, suppose Maria 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 Maria increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Maria 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 embroidered sweaters. 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, Maria's opportunity cost of producing embroidered sweaters is previously. it was
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Answer the given question with a proper explanation and step-by-step solution.
Transcribed Image Text:5. Opportunity cost and production possibilities
Maria is a talented artist who sells hand-crafted goods on her website. Maria currently crafts and sells both crochet hats and embroidered sweaters.
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
Choice (Crochet hats) (Embroidered sweaters) (Crochet hats)
EMBROIDERED SWEATERS
A
B
с
D
E
30
25
15
10
5
0
0
8
6
4
2
On the following graph, use the blue points (circle symbol) to plot Maria's initial production possibilities frontier (PPF).
(?.
1
0
2
3
5
CROCHET HATS
4
0
2
4
6
8
6
7
4
3
8
2
1
0
Initial PPF
Produced
(Embroidered sweaters)
New PPF
0
12
17
19
20
Suppose Maria is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day is
per day.
Now, suppose Maria 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 Maria increases her production of crochet hats, her opportunity cost of producing one more
crochet hat
Suppose Maria 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
embroidered sweaters. 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, Maria's opportunity cost of producing embroidered sweaters is
previously.
it was
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