1. The country of Purdy, with fixed resources and state of technology, can produ
ID: 1132916 • Letter: 1
Question
1. The country of Purdy, with fixed resources and state of technology, can produce the following combination of hybrid cars and monster trucks. Round any decimal answers to two places or leave them as fractions HYBRID CARS MONSTER TRUCKS HYBRID CARS MONSTER TRUCKS 250 240 230 210 180 75 125 175 230 150 125 65 255 265 275 280 a) Find the opportunity cost of producing an additional truck when Purdy is producing 240 cars, 180 cars and 65 cars. Explain why the trend in these costs makes sense (1 point) b) Assume that the PPF is graphed so that cars are on the horizontal axis. Find the slope of the PPF between 180 and 150 cars (you don't need to draw the PPF to do this but it's ok if you do) and explain why this number is related to one of your answers in (a). (1 point)Explanation / Answer
a)
Following is opportunity costs:
240 Cars = (250 - 240) /75
= 10/75
= 0 .13
180 Cars: (210 - 180) / 230 - 175)
= 30 / 55
= 0.54
65 cars: ( 125 - 65) / 275 -265
= 60 / 10
= 6
Based on this trend, we can conclude that opportunity cost is increasing.
b)
Slope = Change in Vertical Value / Change in Horizontal value
= (255 -230) /(180 -150)
= 25 /30
= 0 .83
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