(Shape of the PPF) Suppose a production possibilities frontier includes the following combinations.

Cars Washing Machines

0 1,000

100 600

200 0

A. Graph the PPF, assuming that it has no curved segments.

B. What is the cost of producing an additional car when 50 cars are being produced?

C. What is the cost of producing an additional car when 150 cars are being produced?

D. What is the cost of producing an additional washing machine when 50 cars are being produced? When 150 cars are being produced?

E. What do your answers tell you about opportunity cost?

(Production Possibilities) Suppose an economy uses two resoureces (Labor and Capital) to produce two goods (Wheat and Cloth). Capital is relatively more useful in producing cloth, and labor is relatively more useful in producing wheat. If the supply of capital falls by 10 percent and the supply of labor increases by 10 percent, how will the PPF for wheat and cloth change?