Below Is the Production Possibilities Table for the Country of Lavaland

question 129

Essay

Below is the production possibilities table for the country of Lavaland. $\begin{array} { | c | c | c | c | c | } \hline \begin{array} { c } \text { \% resources } \\\text { devoted to } \\\text { production } \\\text { of tanks }\end{array} & \begin{array} { c } \text { Number of } \\\text { tanks }\end{array} & \begin{array} { c } \text { \% resources } \\\text { devoted to } \\\text { production } \\\text { of pizza }\end{array} & \begin{array} { c } \text { Number of } \\\text { pizzas }\end{array} & \text { Row } \\\hline 0 & 0 & 100 & 15 & \text { A } \\\hline 20 & 4 & 80 & 14 & \text { B } \\\hline 40 & 7 & 60 & 12 & \text { C } \\\hline 60 & 9 & 40 & 9 & \text { D } \\\hline 80 & 11 & 20 & 5 & \text { E } \\\hline 100 & 12 & 0 & 0 & \text { F } \\\hline\end{array}$ (a) Use the information in the Table to draw the production possibilities curve (PP1) for Lavaland. Put tanks on the horizontal axis.
(b) What is the cost to Lavaland of moving from point A to point B on its PP1?
(c) What is the cost to Lavaland of moving from point E to point F?
(d) What general economic principle is being illustrated by your answers to part (b) and (c) above? Explain.

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Definitions:

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Invisible Hand

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