Question

The figure to the right illustrates the trade-offs facing Ford Motor Company The line in the graph is Ford's production possibilities frontier If Ford uses all its resources to produce trucks, how many can it produco? 9 thousand trucks per day (Enter a numeric response using a real number rounded to one decimal place.) Suppose Ford is currently building 6 thousand cars per day. To build an additional 1 thousand cars, how many fewer trucks can be built thousand fewer trucks per day Quantity of trucks (1,000s per day) PPF 3456789 10 11 12 13 14 Quantity of cars (1,000s per day)

Answer 1

In order to produce 1 thousand more cars i.e. from 6 thousand to 7 thousand, Ford will have to build 0.5 thousand fewer trucks per day. This curve shows a trade off between the quantity of trucks vs the quantity of cars that can be produced by Ford. As the quantity made of cars increase, the quantity produced of trucks decrease and vice-versa.