Question

What the What s the Answer cost of going from possibility D to possibility C dWhat is the tsta Answer 4-7) only two products cheese and ine. The production 1 levels are t (LO 7) Utopia produces Table 11S TABLE 1.15 WINE CHEESE output %Inputs %Inputs Output 0 40 70 95 105 110 30 40 so 65 75 80 40 80 100 80 100 a) From these data. calculate Utopias production possibilities t TABLE 1.16 Cheese Wine 0 b) Can Utopia produce 65 cheese and 95 wine? Answer:- c) If Utopia is at D, what is the total cost of 10 more cheese? Answer: d) If Utopia is at D what is the total cost of 25 more wine? Answer:

Answer 1

Solution:

Production possibility curve shows the combinations of outputs that an economy can produce.

a.

	A	B	C	D	E	F
Cheese	0	30	50	65	75	80
Wine	110	105	95	70	40	0

B. Utopia can not produce 65 cheese and 95 wine because this point is outside the production possibility curve.

c. At D, Utopia produces 65 cheese and 70 wine. To produce 10 more cheese, it has to forego 30 wine.Hence, total cost of 10 more cheese is 30 wine.

d.At D, Utopia produces 65 cheese and 70 wine. To produce 25 more wine, it has to forego 15 cheese.Hence, total cost of 25 more wine is 15 cheese.