Question

 Here is the production possibilities table for war goods and civilian goods:

	Production Alternatives
Type of Production	A	B	C	D	E
Robots	0	250	450	650	850
Wheat	130	117	109	89	0

 a. Draw a production possibilities curve for robots and wheat using the data above.

 b. Label the points where the economy would be efficient (A), underutilized (B) and unattainable (C).

 c. What is the opportunity cost of moving from point A to point B?

 d. What is the opportunity cost of moving from point B to point C?

 e. What is the opportunity cost of moving from point D to point E?

Answer 1

A)

B)

The economy will be efficent on Production possibility curve.

Economy will be inefficient under PPC.

Economic will at unattainable point outside of ppc.

C) opportunity cost from A to B=13/250=0.052

D) opportunity cost from B to c=8/200=0.04

E) opportunity cost from D to E=89/200=0.445