Table 2-6 -Refer to Table 2-6. the Fruit Farm Produces Only Apples

question 174

Essay

Table 2-6

-Refer to Table 2-6. The Fruit Farm produces only apples and pears. The table above shows the maximum possible output combinations of the two fruits using all resources and currently available technology.
a. Graph the Fruit Farm's production possibilities frontier. Put apples on the horizontal axis and pears on the vertical axis. Be sure to identify the output combination points on your diagram.
b. Suppose the Fruit Farm is currently producing at point D. What is the opportunity cost of producing an additional 8,000 pounds of pears?
c. Suppose the Fruit Farm is currently producing at point D. What happens to the opportunity cost of producing more and more pears? Does it increase, decrease, or remain constant? Explain your answer.
d. Suppose the Fruit Farm is currently producing at point G. What happens to the opportunity cost of producing more and more apples? Does it increase, decrease, or remain constant? Explain your answer.
e. Suppose the Fruit Farm is plagued by the apple maggot infestation which destroys apple trees but not pear trees. Show in a graph what happens to its PPF.

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Definitions:

Accounts Receivable

Funds that are due to a company from its customers for products or services that have been provided but remain unpaid.

Sales Revenue

The total income received by a company from its sales of goods or services, before any expenses are subtracted.

Cash Collected

The total amount of cash received by a company during a specific period, including receipts from sales, services, and other sources.

Quality

The degree to which a product, service, or process is free from defects, deficiencies, and significant variations, meeting specified standards or customer expectations.