Answer to Question #46044 in Economics of Enterprise for Stephanie

Question

PPC’s APPLICATION ASSIGNMENT: page 25, # 11

a) Draw a production possibilities curve for this agricultural enterprise.

b) Can this farmland produce 6000 bushels of corn and 1500 kg of beef during the same year? Mark this production level as point H on your graph. Explain what must happen in order for this enterprise to reach this level of production.

c) What is the opportunity cost of expanding beef production from 900 kg to 1200 kg?

d) What is the opportunity cost of expanding corn production from Level B to Level A?

e) If a decision is made to produce 5000 bushels of corn, how much beef can be produced on this farm at the same time? Mark this production level as point K on your graph.

f) Given this set of production possibilities, should this enterprise specialize (in either corn or beef production) or produce ample quantities of both products? Justify your decision,