Answer to Question #127581 in Microeconomics for Neeru

Question

Possible output combinations Apples Pears
A 70 0
B 60 20
C 50 36
D 40 48
E 30 56
F 20 60
G 10 63
H 0 65
The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology.

a. Graph the Fruit Farm's production possibilities frontier. Put apples on the horizontal axis and pears on the vertical axis. Be sure to identify the output combination points on your diagram.

b. Suppose the Fruit Farm is currently producing at point D. What is the opportunity cost of producing an additional 8,000 kilos of pears?

c. Suppose the Fruit Farm is currently producing at point D. What happens to the opportunity cost of producing more and more pears? Does it increase, decrease or remain constant? Explain your answer.

Answer 1

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