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Nick is a skilled toy maker who is able to produce both trucks and drums. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time. Choice DRUMS A B C D E 30 25 20 15 10 On the following graph, use the blue points (circle symbol) to plot Nick's initial production possibilities frontier (PPF). 5 0 0 1 drum. 5 drums Hours Producing (Trucks) 8 6 4 2 0 8 drums 1 13 drums (Drums) 0 2 4 6 8 2 3 TRUCKS (Trucks) 4 Produced 3 2 1 0 5 (Drums) 0 8 13 15 16 6 8 Suppose Nick is currently using combination D, producing one truck per day. His opportunity cost of producing a second truck per day is per day. Initial PPF Now, suppose Nick is currently using combination C, producing two trucks per day. His opportunity cost of producing a third truck per day is per day. New PPF ? vious analysis, you can determine that as Nick increases his production of trucks, his opportunity cost of producing one more truck buys a new tool that enables him to produce twice as many trucks per hour as before, but it doesn't affect his ability to produce drums. h points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more trucks per hour, Nick's opportunity cost of producing drums is it was previously.
Nick is a skilled toy maker who is able to produce both trucks and drums. He has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of his time. Choice DRUMS A B C D E 30 25 8 20 15 o On the following graph, use the blue points (circle symbol) to plot Nick's initial production possibilities frontier (PPF). 10 5 0 0 Hours Producing (Trucks) 8 6 4 1 decreases 2 0 increases (Drums) 0 2 2 4 6 8 3 4 TRUCKS (Trucks) (Drums) 4 0 3 8 2 13 15 16 Produced 1 0 5 6 7 8 -O Initial PPF New PPF Suppose Nick is currently using combination D, producing one truck per day. His opportunity cost of producing a second truck per day is per day. ? Now, suppose Nick is currently using combination C, producing two trucks per day. His opportunity cost of producing a third truck per day is per day. From the previous analysis, you can determine that as Nick increases his production of trucks, his opportunity cost of producing one more truck new tool that enables him to produce twice as many trucks per hour as before, but it doesn't affect his ability to produce drums. (triangle symbol) to plot his new PPF on the previous graph. remains constant Because he can now make more trucks per hour, Nick's opportunity cost of producing drums is it was previously.
DRUMS 30 25 20 10 5 0 0 1 2 3 4 TRUCKS 5 6 7 8 o Initial PPF New PPF Suppose Nick is currently using combination D, producing one truck per day. His opportunity cost of producing a second truck per day is per day. Now, suppose Nick is currently using combination C, producing two trucks per day. His opportunity cost of producing a third truck per day is per day. From the previous analysis, you can determine that as Nick increases his production of trucks, his opportunity cost of producing one more truck higher than Suppose Nick buys a new tool that enables him to produce twice as many trucks per hour as be lower than esn't affect his ability to produce drums. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more trucks per hour, Nick's opportunity cost of producing drums is the same as it was previously.