Question

5. Opportunity cost and production possibilities Kyoko is a skilled toy maker who is able to produce both boats and balls. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time. Hours Producing (Boats) (Balls) Produced (Boats) (Balls) Choice A 8 0 4 0 B 6 2 3 8 cover с 4 4 2 14 D 2 6 1 16 E 0 8 0 17 On the following graph, use the blue points (circle symbol) to plot Kyoko's initial production possibilities frontier (PPF). ? 30 25 Initial PPF 20 New PPF O BALLS 15 TO 10 A 5 0 2 3 6 7 8 BOATS Imagine Kyoko is currently using combination D, producing one boat per day. Her opportunity cost of producing a second boat per day is 1 ball per day. Now, imagine Kyoko is currently using combination C, producing two boats per day. Her opportunity cost of producing a third boat per day is per day. From the previous analysis, you can determine that as Kyoko increases her production of boats, her opportunity cost of producing one more boat Imagine Kyoko buys a new tool that enables her to produce twice as many boats per hour as before, but it doesn't affect her ability to produce balls. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more boats per hour, Kyoko's opportunity cost of producing balls is it was previously.

Help me check the graph and fill the blanks, thank you!

Answer 1

	Initial PPF	New PPF
Choice	Boats	Balls	Boats	Balls
A	4	0	8	0
B	3	8	6	8
C	2	14	4	14
D	1	16	2	16
E	0	17	0	17

Due to new tool, Kyoko now enables to produce twice of Boats than before.

20 15 Balls 10 Initial PPF -New PPF 5 0 T T 0 1 2. 3 4 5 6 7 00 9 Boats

Opportunity cost of producing a boat = (loss of production of balls / gain in production of boat)

Kyoko is currently using combination D, producing 1 boat and 16 balls. In order to produce second boat, Kyoko has to move to combintaion C. In order to do that, Kyoko has to decerease the production of balls from 16 to 14 (i.e., decrease balls production by 2 units).

Opportunity cost of producing second boat = (Decrease in balls production / Increase in boats production)

=> Opportunity cost of producing second boat = (2 / 1) = 2 balls

Answer: Imagine Kyoko is currently using combination D, producing one boat per day. Her opportunity cost of producing a second boat per day is 2 ball per day.

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Now, imagine Kyoko is currently using combination C, producing 2 boat and 14balls. In order to produce third boat, Kyoko has to move to combintaion B. In order to do that, Kyoko has to decerease the production of balls from 14 to 8 (i.e., decrease balls production by 6 units).

Opportunity cost of producing second boat = (Decrease in balls production / Increase in boats production)

=> Opportunity cost of producing second boat = (6/ 1) = 6 balls

Answer: Imagine Kyoko is currently using combination C, producing two boats per day. Her opportunity cost of producing a third boat per day is 6 balls per day.

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From the previous analysis, you can determine that as Kyoko increases her production of boats, her opportunity cost of producing one more boat increases.

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After buying new tools kyoko enable to make twice the boats than before.

Because she can now make more boats per hour, Kyoko's opportunity cost of producing balls is higher than it was previously. Because now more boats has to be sacrifice in order to produce each balls than before.