ADraw a Production Possibilities Frontier for a Country That Produces

question 60

Essay

a.Draw a production possibilities frontier for a country that produces two goods, beer and pretzels.Assume that resources are equally suited to both tasks.
b.Define opportunity costs.
c.Use your production possibilities frontier graph to demonstrate the principle of opportunity costs.

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Definitions:

Law of Diminishing Marginal Utility

An economic principle stating that as consumption of a good or service increases, the marginal utility derived from each additional unit decreases.

Marginal Utility

Marginal Utility is the added satisfaction or benefit a consumer receives from consuming one more unit of a good or service.

Diminishing Marginal Utility

The principle that the utility or satisfaction gained by consuming each additional unit of a good or service decreases as more of that good or service is consumed.

Marginal Utility

The extra pleasure or benefit derived from consuming an additional unit of a product or service.