Draw a Production Possibilities Frontier Showing Increasing Opportunity Cost for Hammers

question 48

Essay

Draw a production possibilities frontier showing increasing opportunity cost for hammers and horseshoes.
a. On the graph, identify the area of feasible outcomes and the area of unfeasible outcomes.
b. On the graph, label a point that is efficient as point E and a point that is inefficient as point I.
c. On the graph, illustrate the effect of the discovery of a new vein of iron ore, a resource needed to make both horseshoes and hammers, on this economy.
d. On a separate graph for hammers and horseshoes, illustrate the effect a new computerized assembly line in the production of hammers would have.

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Definitions:

Accounts Payable Period

The average number of days it takes for a company to pay its invoices from suppliers and creditors.

Cash Disbursements

The total amount of money that a company pays out in cash during a specific period.

Accounts Receivable Balance

The sum of money that customers owe to a business for products or services they have received but have not yet paid for.

Quarterly Sales

The total revenue generated by a business during a specific quarter of the fiscal year.