Microeconomics
Microeconomics
10th Edition
ISBN: 9781259655500
Author: David C Colander
Publisher: McGraw-Hill Education
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Chapter 2.1, Problem 1Q
To determine

The opportunity cost of producing an additional unit.

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What does the slope of a curve between two points have to do with the opportunity cost of producing additional units of good?
Draw a production possibilities curve for food and clothing. If you are operating on the curve, what is the opportunity cost of producing more clothing?  If you are on the curve, is it possible to increase production of one good without decreasing the production of the other?
Drawing a production possibilities frontier (PPF)   Instructions:   Consider an economy than only produces two goods - Blueberries and Batteries.     Step 1: Draw a production possibilities frontier (PPF) for this economy. Label blueberries on the vertical axis and batteries on the horizontal axis. Label one point that is "efficient", one point that is "inefficient", and one point that is "unattainable".   Step 2. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a technological change that increased the production of batteries only. (Hint: The intercept for blueberries will not change.) Clearly label the new PPF.   Step 3. Draw another PPF of the economy with the axes labeled. Grab another color pen/pencil/highlighter and show how the PPF would change if there was a drought that destroyed some of the blueberry harvest. (Hint: The intercept for batteries will not change.) Clearly label the new…
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