Suppose a firm has the following production possibilities data (left columns in the table below), please...

Suppose a firm has the following production possibilities data (left columns in the table below), please determine its Marginal Cost (MC) data and write them in the right columns.

PPF		MC
Pizza (per hour)	Bagel (per hour)	Pizza (per hour)	Bagel (per hour)
0	30	-	-
2	28
4	24
6	18
8	10
10	0

Expert Solution

Pizza (Per hour )	Marginal cost(in terms of bagel)	Bagel (Per hour)	Marginal cost(In terms of pizza)
0	0	0	0
2	2	10	2
4	6	18	2
6	6	24	2
8	8	28	2
10	10	30	2

In order to produce Two extra unit of pizza per hour we have go give up 2 bagels at first which subsequently changes as per the marginal rate of substitution.

Similarly in case of bagel, for producing 10 units per hour we have to give up 2 units of pizzas as per marginal rate of substitution, which subsequently changes accordingly.

Rahul Sunny answered 1 year ago

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