Shape of the PPF
Suppose a production possibilities frontier includes the following combinations:
Cars
|
Washing Machines
|
0
|
1,000
|
100
|
600
|
200
|
0
|
1. Graph the PPF, assuming that it has no curved segments.
2. What is the cost of producing an additional car when 50 cars are being produced?
3. What is the cost of producing an additional care when 150 cars are being produced?
4. What is the cost of producing an additional washing machine when 50 cars are being produced? When 150 cars are being produced?
5. What do your answers tell you about opportunity costs?