Question

Ob 23 NE ww Marked out of 00 Gestion Production Possibility Related Question Use following Table to answer to following questions. Table shows possible productions ot to goods: Food and Clothing, using all wailable resources Table 1 Different combinations of Productions of Food and Clothing item B e D E Food Milos) 0 5 9 12 14 Clothing (maten 40 30 20 10 0 What is the opportunity cost of producing 14 units of food in terms of clothing? b. What is the per unit opportunity cost of clothing in terms of food What is the marginal opportunity cost of food in terms of clothing when you are moving from possibility point B to possibility point d. Wisat in the marginal opportunity cost of food in terms of clothing when you are moving from possibility point to possibility point ? What is the marginal opportunity cost of tood in terms of clothing when you are moving from possibility point to possibility point E7 What is the curvature of the production possibility frontier? Why?

Answer 1

Sol

a

Opportunity cost of producing 14 units of food is 40 units of clothing .

b

Per unit opportunity cost of clothing in terms of food = 14/40 = 0.35 unit of food .

c

Marginal opportunity cost of food from B to C = 10/4 = 2.5 units of clothing .

d

Marginal opportunity cost of food from C to D = 10/3 = 3.33 units of clothing .