Question

The graph below shows Tanya’s weekly production possibilities frontier for doing homework (writing papers and doing problem sets). The vertical intercept (point A) is 8, and the horizontal intercept (point B) is 4.

Production possibilities frontier Problem sets PPF Papers

a. The slope of the production possibilities frontier is .

b. The opportunity cost of doing one problem set is .

c. The opportunity cost of writing one paper is .

Answer 1

A. Slope is -8/4 = -2.

Explanation: slope = ( y2 - y1 ) / ( x2 - x1 ) =( 0-8 )/ ( 4 - 0 ) = -8/4 = - 2, where (x1,y1) = (0,8) and (x2, y2) = (4, 0 )

b.opportunity cost of doing one problem set =( the no. Of papers sacrificed) / ( no. Of problem sets gained ) = 4/8 = 1/2.

Opportunity cost of doing one problem set is 1/2 papers.

C.

opportunity cost of doing one paper =( the no. Of problem set sacrificed) / ( no. Of papers gained ) = 8/4 = 2.

Opportunity cost of doing one paper is 2 problem sets.