Question

Amanda can build 10 tables in an hour. She can also build 25 chairs in an hour. She spends 8 hours a day working (building tables/chairs).

1. Draw and label Amanda’s production possibility frontier for building tables and chairs.
2. What is Amanda’s opportunity cost of building 75 chairs?

Answer 1

1. Amanda’s production possibility frontier for building tables and chairs is a line between points (80 tables; 0 chairs) and (0 tables; 200 chairs).

Amanda’s opportunity cost of building 75 chairs is 30 tables.