Answer to Question #216996 in Microeconomics for poo

Question

v> Combination Tablet (units) Coffee (units)

A 0 10,000

B 100 9,000

C 200 7,500

D 300 5,500

E 400 0

B) Explain how the opportunity cost changes when the production of tablets is increased

progressively from 0 units to 400 units. Give a reason for the changes in opportunity cost

observed.

(4 marks)

C) If a national lockdown reduces the supply of workers in both the tablet and coffee

markets, use a diagram to show how the production possibility curve of the economy

changes. Explain your answer briefly.

(4 marks)

D) If an improvement in technology is seen in the production of coffee, use a diagram to

show how the production possibility curve of the economy changes. Explain your answer

briefly (4 marks)

Answer 1

 

B)

Tablets

Coffee

Opportunity Cost

A

0

10000

-

B

100

9000

$(10000-9000) =1000$

C

200

7500

$(9000-7500)=1500$

D

300

5500

$(7500-5500)=2000$

E

400

0

$(5500-0)=5500$

 

 

The increasing opportunity costs essentially designate that the resources are not entirely malleable to substitute use for the production of tablets. 

C) The reduction of workers is equivalent to a loss or exhaustion in company resource thereby reducing the company's productivity.

D) The improvement of technology witnessed designates a meaning that fewer and less costly input are required for the production process.