Back to Assignment Attempts Keep the Highest/5 17. Opportunity cost and production possibilities Kevin is a talented artist who sells hand-crafted goods on his website. Kevin currently crafts and sells both picture frames and pillows. He spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of his time is spent on each good. Hours Crafting Produced Choice (Picture frames) (Pillows) (Picture frames) (Pillows) A 8 0 0 B 2 3 11 C 4 2 16 D 2 6 1 19 E 0 8 0 20 On the following graph, use the blue points (circle symbol) to plot Kevin's initial production possibilities frontier (PPF). PILLOWS 30 25 20 15 10 5 0 1 2 3 4 5 PICTURE FRAMES 8 7 Initial PPF New PPF Suppose Kevin is currently using combination D, producing one picture frame per day. His opportunity cost of producing a second picture frame per day is per day. Now, suppose Kevin is currently using combination C, producing two picture frames per day. His opportunity cost of producing a third picture frame per day is per day. From the previous analysis, you can determine that as Kevin increases his production of picture frames, his opportunity cost of producing one more picture frame Suppose Kevin buys a new tool that enables him to produce twice as many picture frames per hour as before, but it doesn't affect his ability to produce pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more picture frames per hour, Kevin's opportunity cost of producing pillows is it was previously.
Back to Assignment Attempts Keep the Highest/5 17. Opportunity cost and production possibilities Kevin is a talented artist who sells hand-crafted goods on his website. Kevin currently crafts and sells both picture frames and pillows. He spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of his time is spent on each good. Hours Crafting Produced Choice (Picture frames) (Pillows) (Picture frames) (Pillows) A 8 0 0 B 2 3 11 C 4 2 16 D 2 6 1 19 E 0 8 0 20 On the following graph, use the blue points (circle symbol) to plot Kevin's initial production possibilities frontier (PPF). PILLOWS 30 25 20 15 10 5 0 1 2 3 4 5 PICTURE FRAMES 8 7 Initial PPF New PPF Suppose Kevin is currently using combination D, producing one picture frame per day. His opportunity cost of producing a second picture frame per day is per day. Now, suppose Kevin is currently using combination C, producing two picture frames per day. His opportunity cost of producing a third picture frame per day is per day. From the previous analysis, you can determine that as Kevin increases his production of picture frames, his opportunity cost of producing one more picture frame Suppose Kevin buys a new tool that enables him to produce twice as many picture frames per hour as before, but it doesn't affect his ability to produce pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more picture frames per hour, Kevin's opportunity cost of producing pillows is it was previously.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:Back to Assignment
Attempts
Keep the Highest/5
17. Opportunity cost and production possibilities
Kevin is a talented artist who sells hand-crafted goods on his website. Kevin currently crafts and sells both picture frames and pillows. He spends 8
hours a day working on crafts. The following table gives different daily output scenarios depending on how much of his time is spent on each good.
Hours Crafting
Produced
Choice
(Picture frames) (Pillows) (Picture frames) (Pillows)
A
8
0
0
B
2
3
11
C
4
2
16
D
2
6
1
19
E
0
8
0
20
On the following graph, use the blue points (circle symbol) to plot Kevin's initial production possibilities frontier (PPF).
PILLOWS
30
25
20
15
10
5
0
1
2
3
4
5
PICTURE FRAMES
8
7
Initial PPF
New PPF
Suppose Kevin is currently using combination D, producing one picture frame per day. His opportunity cost of producing a second picture frame per
day is
per day.
Now, suppose Kevin is currently using combination C, producing two picture frames per day. His opportunity cost of producing a third picture frame
per day is
per day.
From the previous analysis, you can determine that as Kevin increases his production of picture frames, his opportunity cost of producing one more
picture frame
Suppose Kevin buys a new tool that enables him to produce twice as many picture frames per hour as before, but it doesn't affect his ability to
produce pillows. Use the green points (triangle symbol) to plot his new PPF on the previous graph.
Because he can now make more picture frames per hour, Kevin's opportunity cost of producing pillows is
it was previously.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 1 images
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education