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Using the information in Table 4 and Figure 4, if the price of tacos is $2 and the price of enchiladas is $4, where will the economy be located on the PPF on the left-hand side of Figure 4?

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Table 4: Production Informatiorn Tacos Enchiladas 4 10 Ben 12 5 17 Figure 4: Madysen Enchiladas Price Segment A Segment PF ment C Segment B Supply Segment E Segment D Tacos Z2 Enchiladas GRAPH IS NOT DRAWN TO SCALE BUT IS ILLUSTRATIVE OF TABLE.

Explanation / Answer

Marginal analysis involves a cost-versus-benefits comparison of various business activities. In marginal analysis, the cost of an activity is measured against incremental changes in volume to determine how the overall change in cost will affect the bottom line of a business. Marginal analysis can show the cost of additional production by a business all the way up to the break-even point. This is generally the maximum cost that a business can sustain without losing money.

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