Question

You are to construct a production possibilities frontier from 2 grocery stores based on the available milk and eggs (you choose which particular milk product and which particular egg product you use). Use the total quantity of milk as the intersection for the vertical axis and the total quantity of eggs as the intersection for the horizontal axis. Connect those points to form your production possibilities frontier, one graph for each store. Determine the opportunity costs of milk in terms of eggs from your production possibilities graph. Describe your production possibilities frontier. Identify on the curve and then explain the unattainable, efficient, and inefficient areas of production. Discuss the concept of increasing opportunity costs and identify whether the opportunity costs from your graph exhibit increasing opportunity costs. Illustrate, based on the opportunity costs for each store, how specialization and trade can lead to a mutually beneficial outcome.

Answer 1