PPF and Opportunity cost questions

Maximum possible combinations of food and clothing that can be produced in a given period of time:

Units of food (millions) Units of clothing (millions)8.0 0.07.0 2.26.0 4.05.0 5.04.0 5.63.0 6.02.0 6.41.0 6.70.0 7.0

1. Draw a PPF for this economy.

2. What is the opportunity cost of moving from producing 4 million units of food to 5 million units of food? __________________________________________

3. What is the opportunity cost of moving from producing 6 million units of clothing to 7 million units of clothing? ________________________________

4. What is the opportunity cost of switching production from 0 units of food to 2 million units of food? _____________________________________________

5. What shape is the PPF curve in this example? Explain in your words why it is this shape. _____________________________________________________________________________________________________________________

6. In what circumstances would the PPF be a straight line? ________________________________________________________________________________

0 1 2 3 4 5 6 7 8 90

1

2

3

4

5

6

7

8

9

Clothing

Food

7. Could a PPF be bowed towards the origin? Explain your answer.__________________________________________________________________________

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