In the space below, you will draw a concave PPF for the imaginary country of Economia,...

In the space below, you will draw a concave PPF for the imaginary country of Economia, which produces just two goods: Bicycles (shown on the vertical axis ) and Skateboards (shown on the horizontal axis).

On this graph, show that Economia can:

Efficiently produce 75 bicycles when its production of skateboards is zero, and label this as point “A.”
Efficiently produce 50 bicycles when its production of skateboards is 100, and label this as point “B.”
Efficiently produce 25 bicycles when its production of skateboards is 130, and label this as point “C.”
Efficiently produce 132 skateboards if its production of bicycles is zero
Calculate the average opportunity cost for a skateboard as production of this good increases from point A to point B (i.e., from 0 to 100 skateboards)

Calculate the average opportunity cost for a skateboard as production of this good increases from point B to point C.

Calculate the average opportunity cost for a skateboard as production of this good increases from point C to point D.

As the production of skateboards increases, what happens to the opportunity cost for this product? Explain.

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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