Question

Bob is a skilled toy maker who is able to produce both cars and balls. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time.

Bob is a skilled toy maker who is able to produce both cars and balls. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time Hours Producing Produced Choice (Cars) (Balls) (Cars) (Balls) 10 16 D 6 19 20 on the following graph, use the blue points (circle symbol) to plot Bob's initial production possibilities frontier (PPF). 30 T 25 Initial PPF 20 New PPF 15 10 CARS

Suppose Bob is currently using combination D, producing one car per day. His opportunity cost of producing a second car per day is _____ per day

A. C1 ball

B. 3 balls

C. 16 balls

D. 19 balls

Now, suppose Bob is currently using combination C, producing two cars per day. His opportunity cost of producing a third car per day is _____ per day

A. 1 ball

B. 6 balls

C. 10 balls

D. 16 balls

From the previous analysis, you can determine that as Bob increases his production of cars, his opportunity cost of producing one more car ____.

A. decreases

B. increases

C. remains constant

Suppose Bob buys a new tool that enables him to produce twice as many cars per hour as before, but it doesn't affect his ability to produce balls. Use the green points (triangle symbol) to plot his new PPF on the previous graph.

Close Explanation

Explanation:

Because he can now make more cars per hour, Bob's opportunity cost of producing balls is ______ it was previously.

A. higher than

B. lower than

C. the same as

Answer 1

30 T 25 Initial PPF 20 New PPF 15 10 7 CARS

1. To produce one more car (1 to 2 cars), Bob has to sacrifice 3 balls (19 to 16 balls).

B) 3 balls

2. To produce 3 cars i.e. 2 to 3 cars, Bob has to sacrifice 6 balls (16 to 10 balls)

B) 6 balls

3. B) increases as firstly it has to sacrifice 3 balls to produce 2 cars and then he sacrifice 6 balls to produce 3rd car.

4.

30 T 25 Initial PPF 20 New PPF 15 10 7 CARS

5) A) higher than