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Graphically show the production possibilities frontier for the nation of Stromboli, using the data given in the following table. Does the principle of increasing costs hold in Stromboli? Stromboli’s 2018 Production Possibilities Pizzas per Year Pizza Ovens per Year 75,000,000 0 60,000,000 6,000 45,000,000 11,000 30,000,000 15,000 15,000,000 18,000 0 20,000

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Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992

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Chapter
Section
BuyFindarrow_forward

Microeconomics: Principles & Policy

14th Edition
William J. Baumol + 2 others
Publisher: Cengage Learning
ISBN: 9781337794992
Chapter 3, Problem 2TY
Textbook Problem
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Graphically show the production possibilities frontier for the nation of Stromboli, using the data given in the following table. Does the principle of increasing costs hold in Stromboli?

Stromboli’s 2018 Production Possibilities
Pizzas per Year Pizza Ovens per Year
75,000,000 0
60,000,000 6,000
45,000,000 11,000
30,000,000 15,000
15,000,000 18,000
0 20,000

To determine

To graph the production possibilities frontier for the nation of Stromboli and to examine the principal of increasing costs.

Explanation of Solution

The Principle of increasing Costs:

The principle of increasing cost refers to the condition where the production of one commodity increase, the opportunity cost of producing the second unit of the same commodity also increases.

Below is the production possibilities frontier graph for the nation of Stromboli.

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