Carlos is a skilled toy maker who is able to produce both trucks and puzzles. 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	Hours Producing		Produced
	(Trucks)	(Puzzles)	(Trucks)	(Puzzles)
A	8	0	4	0
B	6	2	3	8
C	4	4	2	13
D	2	6	1	15
E	0	8	0	16

On the following graph, use the blue points (circle symbol) to plot Carlos's initial production possibilities frontier (PPF).

Suppose Carlos 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 Carlos 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 Carlos increases his production of trucks, his opportunity cost of producing one more truck ____(decreases/increases/remains constant).

Suppose Carlos 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 puzzles. Use the green points (triangle symbol) to plot his new PPF on the previous graph.

Because he can now make more trucks per hour, Carlos's opportunity cost of producing puzzles is (higher than/lower than/the same as) it was previously.
 

Transcribed Image Text:

PUZZLES 30 25 20 15 10 5 0 0 + 1 2 3 4 TRUCKS 5 + 6 + 7 8 Initial PPF New PPF (?) PUZZLES 30 25 20 15 10 5 0 0 + 1 2 3 4 TRUCKS 5 + 6 + 7 8 Initial PPF New PPF (?)

Answer rating: 100% (QA)

Initial PPF Trucks and Puzzles producedlast two columns New PPF Hours producing ... View the full answer