Question

can i please get some help on this problem

2. For this series of questions, please put all your curves on a SINGLE diagram and label each clearly. A clothing accessory company produces scarves and earrings. Below are the production possibility combinations it can produce with the resources that it has. mot bamb wa JATMOSTRO no 5aScarves Earrings 10 0 d vheto 9 ha 50 8 90 08.02 120 7 145 6 00. 5 165 4 185 200 3 2 215 225 1 ib no ao b 230 od seoue 0 a. Plot the production possibility curve with earrings on the VERTICAL axis and scarves on the HORIZONTAL no b. What is the opportunity cost of increasing scarf production from 2 to 3 scarves? c. Suppose the cost of making scarves doubles. Redraw the production possibility curve to reflect this change (reminder: use the same diagram as in (a) and make sure you clearly label each curve). d. Suppose technological advances increase production of both earrings and scarves by 10% (compared with the ORIGINAL set of possibilities) without increasing costs. Demonstrate the effect of this innovation on the production possibility curve (remember to use the same diagram and label your curves clearly).

Answer 1

Farring PPF 1 2 3 4 5 7 8 9 10 Scarves opportunity cost of scarves from 2 to 3 215 - 200 = 15 Earrings © Cost of making searwes doubles More earrings ware sverificied for each scarve produced The PPF becomes more steep. (More Searves: 200 I 2 opportunity tar : 230 220 200 cost Less searwes New PPE produced Initial PPE Each number increases by 10%. The PPF slechts outwards Et > > New Initial s