Combination Automobiles (thousands) Beef (thousands of tons)
A 0 10
B2 9
C 4 7
D 6 4
E 8 0

a. Plot these production possibilities data. What is the opportunity cost of the first 2,000 automobiles produced?
Between which points is the opportunity cost per thousand automobiles highest?
Between which points is the opportunity cost per thousand tons of beef highest?

b. Label a point F inside the curve. Why is this an inefficient point?
Label a point G outside the curve. Why is this point unattainable? Why are points A through E all efficient points?

c. Does this production possibilities curve reflect the law of increasing opportunity costs? Explain.

d. What assumptions could be changed to shift the production possibilities curve?
Combination would be A, B, C, D, E
Automobiles(thousands) would be 0, 2, 4, 6, 8
Beef (thousands) would be 10, 9, 7, 4, 0

Sorry for the confusion

Image taken on 2008-07-14 20:38:00 by Peter Forret.

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