Question

1. Assume that a certain simplified economy produces only two goods, X and Y, with given resources and technology. The following table gives the various possible combinations of the production of the two goods (all units are measured in millions of tons).

Opportunity Cost of
Production Possibility Good X Good Y Good X

A 0 100

B 2 90

C 4 60

D 6 20


a) Calculate the opportunity cost of the production of good X at each point. What law does the trend in those values exhibit?

b) What changes are required for this economy to shift the PPF outward?

Answer 1

Answer:

Ans ° B and rest explanation I don't know

Answer 2

Answer:

At point B= -5

At point C = 15

Opportunity cost = 20

Explanation:

GIVEN- , X and Y, with given resources and technology.

TO FIND - opportunity cost , at point B and point C

SOLUTION -

At point B, the opportunity cost is equal to: (90-100)/(2-0)=(-10)/2=-5 (90-100)/(2-0)=(-10)/2=5)

At point C, the opportunity cost is equal to: (60-90)/(4-2)=30/2=15 (60-90)/(4-2)=30/2=15

X and Y, with given resources and technology.

The opportunity cost will be: =(20-60)/(6-4)=(-40)/2=-20 = (20-60)/(6-4)=(40)/2=20 at point D.

There is a formula to find anything so first we should learn all the formulas and then can solve questions so it is important to learn formulas which is very important for us and without formulas we can't able to solve questions and by knowing formulas we can easily solve them .

So we should have knowledge about the formulas.

FINAL ANSWER - At point B= -5

At point C = 15

Opportunity cost = 20

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