On the following graph, use the blue points (circle symbol) to plot Van's initial production possibilities frontier (PPF). PILLOWS 30 25 20 10 5 0 0 1 + 2 3 4 KNIT CAPS 5 6 + 7 8 O Initial PPF 4 New PPF Suppose Van is currently using combination D, producing one knit cap per day. His opportunity cost of producing a second knit cap per day is ▼per day. Now, suppose Van is currently using combination C, producing two knit caps per day. His opportunity cost of producing a third knit cap per day per day. From the previous analysis, you can determine that as Van increases his production of knit caps, his opportunity cost of producing one more kn Suppose Van buys a new tool that enables him to produce twice as many knit caps per hour as before, but it doesn't affect his ability to produce pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph.
On the following graph, use the blue points (circle symbol) to plot Van's initial production possibilities frontier (PPF). PILLOWS 30 25 20 10 5 0 0 1 + 2 3 4 KNIT CAPS 5 6 + 7 8 O Initial PPF 4 New PPF Suppose Van is currently using combination D, producing one knit cap per day. His opportunity cost of producing a second knit cap per day is ▼per day. Now, suppose Van is currently using combination C, producing two knit caps per day. His opportunity cost of producing a third knit cap per day per day. From the previous analysis, you can determine that as Van increases his production of knit caps, his opportunity cost of producing one more kn Suppose Van buys a new tool that enables him to produce twice as many knit caps per hour as before, but it doesn't affect his ability to produce pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph.
Chapter2: Productions Possibilities, Opportunity Costs, And Economic Growth
Section: Chapter Questions
Problem 6SQP
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Transcribed Image Text:On the following graph, use the blue points (circle symbol) to plot Van's initial production possibilities frontier (PPF).
PILLOWS
30
25
20
5
10
5
0
1
2
3
4
KNIT CAPS
5
6
7
8
Initial PPF
New PPF
?
Suppose Van is currently using combination D, producing one knit cap per day. His opportunity cost of producing a second knit cap per day is
per day.
Now, suppose Van is currently using combination C, producing two knit caps per day. His opportunity cost of producing a third knit cap per day is
per day.
From the previous analysis, you can determine that as Van increases his production of knit caps, his opportunity cost of producing one more knit cap.
Suppose Van buys a new tool that enables him to produce twice as many knit caps per hour as before, but it doesn't affect his ability to produce
pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph.
Because he can now make more knit caps per hour, Van's opportunity cost of producing pillows is
it was previously.
Transcribed Image Text:17. Opportunity cost and production possibilities
Van is a talented artist who sells hand-crafted goods on his website. Van currently crafts and sells both knit caps and pillows. He spends 8 hours a day
working on crafts. The following table gives different daily output scenarios depending on how much of his time is spent on each good.
Choice
PILLOWS
A
B
с
D
E
30
25
20
15
10
On the following graph, use the blue points (circle symbol) to plot Van's initial production possibilities frontier (PPF).
5
0
Hours Crafting
(Knit caps)
1
8
6
4
2
0
2
3
(Pillows) (Knit caps)
0
2
4
6
8
4
KNIT CAPS
5
Produced
4
3
2
1
0
6
(Pillows)
0
11
16
19
20
7
8
?
Initial PPF
41
New PPF
Suppose Van is currently using combination D, producing one knit cap per day. His opportunity cost of producing a second knit cap per day is
per day.
Now, suppose Van is currently using combination C, producing two knit caps per day. His opportunity cost of producing a third knit cap per day is
per day.
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