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Suppose the following production possibility table represents the province of Quebec. a. Construct the production possibilities frontier for cheese and tractors. b. Does this production possibilities...

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Suppose the following production possibility table represents the province of Quebec.

a. Construct the production possibilities frontier for cheese and tractors.

b. Does this production possibilities frontier illustrate the law of increasing opportunity cost? Explain.

c. Suppose a technological advance increases the efficiency of cheese production, leaving tractor production unaffected. What impact would this have on the PPF for the province of Quebec?

d. Suppose tractors represent capital goods and cheese represents consumption goods. If the province of Quebec altered its production from combination B to combination E, what impact could this have on the future economic growth of the province?

 

Answered Same Day Dec 25, 2021

Solution

Robert answered on Dec 25 2021
123 Votes
Suppose the following production possibility table represents the province of Quebec.
a. Construct the production possibilities frontier for cheese and tractors.
. Does this production possibilities frontier illustrate the law of increasing opportunity cost? Explain.
Combinations Tractors Cheese
Opportunity
Cost
A 0 45
B 10 42 -0.3
C 20 36 -0.6
D 30 27 -0.9
E 40 15 -1.2
F 50 0 -1.5

The opportunity cost is the slope of the production possibility curve. Using the formula below, we
have found out the opportunity costs:


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