Answered: Suppose Yakov is currently using…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Suppose Yakov is currently using combination D, producing one train per day. His opportunity cost of producing a second train per day is _________ per day.

Now, suppose Yakov is currently using combination C, producing two trains per day. His opportunity cost of producing a third train per day is ________ per day.

From the previous analysis, you can determine that as Yakov increases his production of trains, his opportunity cost of producing one more train increases or decreases? .

Suppose Yakov buys a new tool that enables him to produce twice as many trains per hour as before, but it doesn't affect his ability to produce balls. Use the green points (triangle symbol) to plot his new PPF on the previous graph.

Because he can now make more trains per hour, Yakov's opportunity cost of producing balls is higher than/lower than or stays same it was previously.

Yakov is a skilled toy maker who is able to produce both trains and balls. He has 8 hours a day to produce toys. The following table shows the da
output resulting from various possible combinations of his time.
Hours Producing
Produced
Choice
(Trains)
(Balls)
(Trains)
(Balls)
A
8
4
B
6
3
10
4
4
16
D
2
6
1
18
E
8
19
On the following graph, use the blue points (circle symbol) to plot Yakov's initial production possibilities frontier (PPF).
30
25
Initial PPE
20
New PPF
15
10
1
2
3
4
7
8
TRAINS
BALLS
어

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