Table 2-2 -Refer to Table 2-2.The Fruit Farm Produces Only Apples and Produces

question 118

Essay

Table 2-2

-Refer to Table 2-2.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 pears.Show in a graph what happens to its PPF.

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Definitions:

Contract Curve

In economics, it represents the set of optimal distributions of goods or resources between parties that maximizes their utility in an exchange.

Relative Price

The price of a good or service in comparison to the price of other goods and services, reflecting its opportunity cost.

Marginal Utility

The additional satisfaction or utility a consumer gains from consuming one more unit of a good or service.

Tee Shirts

A casual garment made of fabric, typically cotton, with a T-shaped body and short sleeves, worn by people of all ages and genders.