Question

12 The figure to the right illustrates the trade-offs facing Ford Motor Company. The line in the graph is Ford's production possibilities frontier 10 If Ford uses all its resources to produce trucks, how many can it produce? 9 thousand trucks per day. (Enter a numeric response using a real number rounded to one decimal place.) Suppose Ford is currently building 3 thousand cars per day. To build an additional 1 thousand cars, how many fewer trucks can be built? thousand fewer trucks per day 0 PPF o 1 2 3 4 5 6 7 8 9 10 11 12 13 14 Quantity of cars (1,000s per day)

Answer 1

From the graph we see that Ford can produce either 9000 trucks or 6000 cars per day. Hence when it uses all its resources in truck production, it produces 9 thousand trucks per day

It is currently producing 3000 cars and 8000 trucks each day when it lies on the trade off curve. For an additional 1000 cars to produce it shifts to a level where it is now producing 4000 cars and 7000 trucks each day

Hence it should build 1 thousand fewer trucks each day.