(Answered) A nation with fixed quantities of resources is able to

Economics

A nation with fixed quantities of resources is able to produce any of the following combinations of bread and ovens:

LOAVES OF BREAD (MILLIONS) OVENS (THOUSANDS)

75 0

60 12

45 22

30 30

15 36

0 40

These figures assume that a certain number of previously produced ovens are available in the current period for baking bread.

a. Using the data in the table, graph the ppf (with ovens on the vertical axis).

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 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?

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Microeconomics, Economics

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