Table below presents different combinations of a simple economy that uses its resources to produce guns or/and butter Option Butter (tonnes) Guns (units) A 0 15 B 1 14 C 2 12 D 3 9 E 4 5 F 5 0 a) Construct the PPC by drawing guns production on the vertical axis and butter production on the horizontal axis and determine its slope. b) Consider that the economy is producing at option C. Explain the concept of the opportunity cost if the economy increased the production of butter and moved its production to point D c) Calculate the opportunity cost if there is a move from C to D and later a further move from D to E d) Is the opportunity cost increasing or decreasing as the economy produces more butter? Fully explain why
Q.1 Table below presents different combinations of a simple economy that uses its resources to produce guns or/and butter
Option Butter (tonnes) Guns (units)
A 0 15
B 1 14
C 2 12
D 3 9
E 4 5
F 5 0
a) Construct the PPC by drawing guns production on the vertical axis and butter production on the horizontal axis and determine its slope.
b) Consider that the economy is producing at option C. Explain the concept of the
c) Calculate the opportunity cost if there is a move from C to D and later a further move from D to E
d) Is the opportunity cost increasing or decreasing as the economy produces more butter? Fully explain why
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