Question: In Problem, what is the marginal cost of 1 kilogram of food in Yucatan when the quantity produced is 150 kilograms per day? What is special about the marginal cost of food in Yucatan?

Problem: Suppose that Yucatan's production possibilities are:

          Food                                      Sunscreen
(kilograms per month)                    (litres per month)

          300                     and                   0

          200                     and                  50

          100                     and                 100

            0                      and                 150

a. Draw a graph of Yucatan's PPF and explain how your graph illustrates a tradeoff.

b. If Yucatan produces 150 kilograms of food per month, how much sunscreen must it produce if it achieves production efficiency?

c. What is Yucatan's opportunity cost of producing (i) 1 kilogram of food and (ii) 1 litre of sunscreen?

d. What is the relationship between your answers to part (c)?