1. Opportunity cost and production possibilities Megan is a skiled toy maker who

Question

1. Opportunity cost and production possibilities Megan is a skiled toy maker who is able to produce both trains and kites. She has 8 hours a day to produce toys. The following table shows the dalily output resulting from various possible combinations of her time. Hours Producing Produced Choice (Trains) (Kites) (Trains) (Kites) 0 13 15 16 2 On the following graph, use the blue points (circle symbol) to plot Megan's initial production possibilities frontier (PPF) 30 T 25 Initial PPF 20 New PPF 15 10

Explanation / Answer

1. 2 kites

2. 5 kites

3. increases

No. of trucks No. of kites Opportunity cost

0 16

1 15 - 1

2 13 - 2

3 8 - 5

4 0 - 8

4. decreases

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