Assume that the figure below accurately represents Apple’s PPFs for 2020 and 202

Question

Assume that the figure below accurately represents Apple’s PPFs for 2020 and 2025 and that in 2025 it has customer orders for 110,000 four-door sedans and 65,000 two-door convertibles. Explain whether Apple can fill all these orders. Assume that the figure below accurately represents Apple’s PPFs for 2020 and 2025 and that in 2025 it has customer orders for 110,000 four-door sedans and 65,000 two-door convertibles. Explain whether Apple can fill all these orders. Assume that the figure below accurately represents Apple’s PPFs for 2020 and 2025 and that in 2025 it has customer orders for 110,000 four-door sedans and 65,000 two-door convertibles. Explain whether Apple can fill all these orders.

Explanation / Answer

In 2025, Apple using all its resources can produce either 150,000 two-door convertibles or 150,000 four-door sedans.

Thus, the opportunity cost of producing 1 four-door sedan is (150,000/150,000) 1 two-door convertible while the opportunity cost of producing 1 two-door convertible is (150,000/150,000) 1 four-door sedan.

So, if Apple produces 110,000 four-door sedans then it will have to sacrifice the production of 110,000 two-door convertibles and would left with resources to produce only 40,000 two-door convertibles.

Thus, given the resources available with Apple in 2025 (as shown by its PPF for 2025), Apple would not be able to produce the combination of 110,000 four-door sedans and 65,000 two-door convertibles.

Hence, Apple would not be able to fulfill all these orders.

Related Questions

Navigate

• Browse (All)
• Browse A
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.