Question

Choice Hours Producing (Trains) (Puzzles) Produced (Trains) (Puzzles) 10 6 4 2 0 2 4 6 3 2 1 19 20 E 8 0 On the following graph, use the blue points (circle symbol) to plot Larry's initial production possibilities from Initial PPF New PPF PUZZLES 0 1 2 3 TRAINS

Answer 1

Russles 2 3 4 Trains

• At point D, 1 train and 19 puzzle is being produced. At point C, 2 trains and 16 puzzle is being produced. We can see that to raise the production of train by 1, production of puzzle will be reduced by 3 units. Option B is correct.
• At point C, 2 train and 16 puzzle is being produced. At point B, 3 trains and 10 puzzle is being produced. We can see that to raise the production of train by 1, production of puzzle will be reduced by 6 units. Option B is correct.
• From point E to D, 1 unit of puzzle is reduced to produce 1 more unit of train. This means opportunity cost of one more train is 1 unit of puzzle.

From point D to C, 3 unit of puzzle is reduced to produce 1 more unit of train. This means opportunity cost of one more train is 3 unit of puzzle.

From point C to B, 6 unit of puzzle is reduced to produce 1 more unit of train. This means opportunity cost of one more train is 6 unit of puzzle.

From point B to A, 10 unit of puzzle is reduced to produce 1 more unit of train. This means opportunity cost of one more train is 10 unit of puzzle.

Thus opportunity cost of producing one more unit of train increase at every point from A to E.

Option B is correct.