Question

 Lucia is a skilled toy maker who is able to produce both trucks and kites. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time.

 On the following graph, use the blue points (circle symbol) to plot Lucia's initial production possibilities frontier (PPF).

 Suppose Lucia is currently using combination D, producing one truck per day. Her opportunity cost of producing a second truck per day is _______  per day.

 Now, suppose Lucia is currently using combination C, producing two trucks per day. Her opportunity cost of producing a third truck per day is _______  per day.

 From the previous analysis, you can determine that as Lucia increases her production of trucks, her opportunity cost of producing one more truck _______ 

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

 Because she can now make more trucks per hour, Lucia's opportunity cost of producing kites is _______  it was previously.

Answer 1