Pedras is a small, isolated island in the Pacific. The inhabitants grow cherry tomatoes and catch salmon. The accompanying table shows the maximum annual output combinations of tomatoes and salmon that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for cherry tomato production, there are fewer resources available for catching salmon. CHERRY TOMATOESSALMON 0 150050014009001200120090014005001500 0 Draw a production possibility frontier with cherry tomatoes on the horizontal axis and salmon on the vertical axis illustrating these options, label the points. ( A-F) On your graph put in a point to indicate 500 pounds of salmon and 800 pounds of cherry tomatoes, Label this point ‘G’. Can the economy produce at this point YES or No. Explain what the point illustrates. Using an example , explain how the Production possibilities curve illustrate the concept of opportunity cost Sketch a production possibilities curve on which you illustrate a shift to the right. ii) State three factor that might cause the production possibilities curve to shift to the right ( use bullets to highlight the start of each point) (

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Pedras is a small, isolated island in the Pacific. The inhabitants grow cherry tomatoes and catch salmon. The accompanying table shows the maximum annual output combinations of tomatoes and salmon that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for cherry tomato production, there are fewer resources available for catching salmon.

CHERRY TOMATOES	SALMON
0	1500
500	1400
900	1200
1200	900
1400	500
1500	0

Draw a production possibility frontier with cherry tomatoes on the horizontal axis and salmon on the vertical axis illustrating these options, label the points. ( A-F)

On your graph put in a point to indicate 500 pounds of salmon and 800 pounds of cherry tomatoes, Label this point ‘G’. Can the economy produce at this point YES or No. Explain what the point illustrates.

Using an example , explain how the Production possibilities curve illustrate the concept of opportunity cost

Sketch a production possibilities curve on which you illustrate a shift to the right.
ii) State three factor that might cause the production possibilities curve to shift to the right ( use bullets to highlight the start of each point) (

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