LECTURE 2 EXERCISE: PRODUCTION POSSIBILITIES Construct a Production Possibilities Curve based on the following Production Possibilities Schedule: Missiles (#) Milk (millions of gallons) 0 40 10 36 21 30 31 21 40 10 47 O 1. What are the assumptions behind the construction of the curve? 2. Explain the shape of the curve. 3. Calculate the opportunity cost of producing the first 10 missiles. 4. Calculate the opportunity cost of producing the last 7 missiles. 5. What two central facts of economic life (in the neoclassical view) are displayed by the cur Graph the additional two points: Missiles (#) Milk (millions of gallons) 30 15 35 25