Answered: Suppose Hilary is currently using…

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter1: Ten Principles Of Economics

Section: Chapter Questions

Problem 2CQQ

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Suppose Hilary is currently using combination D, producing one car per day. Her opportunity cost of producing a second car per day is ______ per day.

Now, suppose Hilary is currently using combination C, producing two cars per day. Her opportunity cost of producing a third car per day is ______ per day.

From the previous analysis, you can determine that as Hilary increases her production of cars, her opportunity cost of producing one more car _________ .

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

Because she can now make more cars per hour, Hilary's opportunity cost of producing puzzles is higher than/lower than/or same as it was previously.

4. Opportunity cost and production possibilities
Hilary is a skilled toy maker who is able to produce both cars and puzzles. She has 8 hours a day to produce toys. The following table shov
output resulting from various possible combinations of her time.
Hours Producing
Produced
Choice
(Cars)
(Puzzles)
(Cars)
(Puzzles)
A
4
B
11
4
4
2.
15
D
2
6.
18
8
19
On the following graph, use the blue points (circle symbol) to plot Hilary's initial production possibilities frontier (PPF).
30
25
Initial PPF
20
New PPF
10
1
2
5
6
7
8
CARS
PUZZLES

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