Table: Crab and Cake Production in Chesapeake Crab Production Cake Production 500 400 250 300 450 200 600 100 700 750 Reference: Ref 2-23 Table: Crab and Cake Production in Chesapeake (Table: Crab and Cake Production in Chesapeake) Use Table: Crab and Cake Production in Chesapeake. The table shows the maximum annual output combinations of crabs and cakes. Given the scarce resources and limited technology, as Chesapeake uses more resources for the production of cakes, fewer resources are available to produce crabs. Can this nation produce 200 crabs and 500 cakes? Is this efficient? Explain.
Answer:
If the resources are fixed and the level of technology is also given a country can not increase the production of both the goods at the same time. It can increase the production of one good if it decreases the production of the other good.
According to the given data if this country produces 200 crabs then it can produce a maximum of 600 cakes. It can also produce less than 600 cakes i.e. 500 but the country can not produce more than 600 if it produces 200 crabs. So the given nation can produce 200 crabs and 500 cakes.
This scale will not be efficient because the country has the potential to produce 600 cakes but it is producing less. So 200 crabs and 500 cakes is not an efficient bundle of production. This bundle will lie within the production possibility frontier (PPF) of the country and all the bundles that lie within the PPF are inefficient.
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