a.) A nation with fixed quantities of resources is able to produce any of the following combinations of bread and ovens: Loaves of breadOvens (millions) (thousands) 750 6012 4522 3030 1536 040

b.) Does the principle of "increasing opportunity cost" hold in this nation? Explain briefly.(Hint: What happens to the opportunity cost of bread-measured in the number of ovens-as bread production increases?)

c.) If this country chooses to produce both ovens and bread, what will happen to the ppf over time? Why?

Suppose that a simple society has an economy with only one resource, labor. Labor can be used to produce only 2 commodities - X, a necessity good (food), and Y, a luxury good (music and merriment). Suppose that the labor force consists of 100 workers. One laborer can produce either 5 unites of necessity per month (by hunting and gathering) or 10 units of luxury per month (by writing songs, playing the guitar, dancing, and so on).

Where does the PPF intersect the Y-axis? Where does it intersect the X-axis? What meaning do those points have?

Suppose the economy ended up producing at a point inside the PPF. Give at least 2 reasons why this could occur. What could be done to move the economy to a point on the PPF?

Suppose you succeeded in lifting your economy to a point on its PPF. What point would you choose? Is it allocatively efficient? How might your small society decide the point at which it wanted to be?

Once you have chosen a point on the PPF, you still need to decide how your society's product will be divided up. If you were a dictator, how would you decide? What would happen if you left product distribution to the free market? Would this be distributively efficient?