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# Suppose that Ned can produce either potato chips or computer chips. If he only produces potato...

Suppose that Ned can produce either potato chips or computer chips. If he only produces potato chips he can produce 50 in a day. If he only produces computer chips, he can produce 25 in a day. Drag the endpoints of the line to plot his production possibilities frontier (PPF) on the graph. What is the opportunity cost of computer chip production in terms of potato chips/computer chip? 3/4 O 112 O 25
Question 6 of 24 > Potato Chips ОООООО Ned's PDF 45 50 o 5 10 15 20 25 30 35 40

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Answer #2 ✔ Recommended Answer

If Ned uses all his resources in the production of potato chips then it can produce a maximum of 50 potato chips.

On the other hand, if Ned uses all his resources in the production of computer chips then it can produce a maximum of 25 computer chips.

Potato chips are taken on the Y-axis. So, Y-intercept would be 50.

Computer chips are taken on the X-axis. So, X-intercept would be 25.

Following is the required figure -

Calculate the opportunity cost of computer chip production in terms of potato chips/computer chips -

Opportunity cost = Maximum quantity of potato chips that can be produced/Maximum quantity of computer chips that can be produced

Opportunity cost = 50/25 = 2

Thus,

The opportunity cost of computer chip production in terms of potato chips/computer chip is 2.

Hence, the correct answer is the option (b) [2].

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