**Activity: Understanding Production Possibilities Curves (PPC)****Scenario:**Suppose Martha and Julia both work at a bakery making bread and muffins. In one hour, Martha can either make 10 loaves of bread or 40 muffins, while Julia can either make 12 loaves of bread or 60 muffins. Both Martha and Julia work 8 hours a day.---**Task a: Draw Martha’s Daily PPC****Instructions:** Use the tool provided to draw Martha’s PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram.**Graph Description:**- **Axes:** The x-axis represents muffins, and the y-axis represents loaves of bread.- **Endpoints:** - Maximum muffins: Plot at (320, 0) because Martha can make 40 muffins/hour x 8 hours = 320 muffins. - Maximum loaves of bread: Plot at (0, 80) because Martha can make 10 loaves/hour x 8 hours = 80 loaves.---**Task b: Draw Julia’s Daily PPC****Instructions:** Use the tool provided to draw Julia’s PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram.**Graph Description:**- **Axes:** The x-axis represents muffins, and the y-axis represents loaves of bread.- **Endpoints:** - Maximum muffins: Plot at (480, 0) because Julia can make 60 muffins/hour x 8 hours = 480 muffins. - Maximum loaves of bread: Plot at (0, 96) because Julia can make 12 loaves/hour x 8 hours = 96 loaves.This exercise will help you understand the concept of opportunity cost and how individuals can allocate their resources to maximize production within their constraints. **Opportunity Cost and Advantage Analysis: Bread vs. Muffins****c. Opportunity Cost for One Loaf of Bread**- **Martha's opportunity cost of making a loaf of bread:** ___ muffins- **Julia's opportunity cost of making a loaf of bread:** ___ muffins**d. Opportunity Cost for One Muffin****Instructions:** Enter your responses rounded to two decimal places.- **Martha's opportunity cost of making a muffin:** ___ loaves of bread- **Julia's opportunity cost of making a muffin:** ___ loaves of bread**e. Comparative Advantage in Making Bread**Who has the comparative advantage?- ☐ Neither- ☐ Julia- ☐ Martha**f. Absolute Advantage in Making Bread**Who has the absolute advantage?- ☐ Neither- ☐ Martha- ☐ Julia**g. Decision Making for Bakery Owners**Suppose you are the owner of the bakery. If Julia and Martha are currently both spending all of their time making muffins, then which of them should you ask to start making bread?- ☐ Martha because her opportunity cost of making bread is lower than Julia’s.- ☐ Julia because her opportunity cost of making bread is higher than Martha’s.- ☐ Julia because her opportunity cost of making bread is lower than Martha’s.- ☐ Martha because her opportunity cost of making bread is higher than Julia’s.This educational exercise focuses on understanding opportunity costs and assessing comparative and absolute advantages in a hypothetical bakery scenario involving two individuals, Julia and Martha. By calculating opportunity costs and evaluating advantages, you will gain insights into optimizing production decisions in a business context.

Opportunity cost is the cost of producing one good in terms of other good. Opportunity cost shows…

Suppose Martha and Julia both work at a bakery making bread and muffins. In an hour, Martha can either make 10 loaves of bread or 40 muffins, while Julio con either make 12 loaves of bread or 60 muffins. Both Martha and Julie work 8 hours a day. s. Draw Martha's daily PPC. Instructions: Use the tool provided to draw Martha's PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram. Loaves of bread 100 Loaves of bread 90 80 70 60 50 30 20 10 0 120 108 96 84 72 60 48 36 24 12 Martha's PPC b. Draw Julia's daily PPC. Instructions: Use the tool provided to draw Julie's PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram. 0 40 80 120 160 200 240 280 320 360 400 Muffins Julia's PPC Tools 60 120 180 240 300 360 420 480 540 600 Muffins line 1 O Tools line 1 O

Suppose Martha and Julia both work at a bakery making bread and muffins. In an hour, Martha can either make 10 loaves of bread or 40 muffins, while Julio con either make 12 loaves of bread or 60 muffins. Both Martha and Julie work 8 hours a day. s. Draw Martha's daily PPC. Instructions: Use the tool provided to draw Martha's PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram. Loaves of bread 100 Loaves of bread 90 80 70 60 50 30 20 10 0 120 108 96 84 72 60 48 36 24 12 Martha's PPC b. Draw Julia's daily PPC. Instructions: Use the tool provided to draw Julie's PPC curve. Plot only the endpoints and locate these endpoints on the axes of the diagram. 0 40 80 120 160 200 240 280 320 360 400 Muffins Julia's PPC Tools 60 120 180 240 300 360 420 480 540 600 Muffins line 1 O Tools line 1 O

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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