Question 3

TABLE 2 shows production possibilities between wheat and cars

A B C D E F

Wheat 0 20 35 45 50 52

Cars 21 20 18 14 8 0

a) If 16 cars are produced, approximately how much wheat is produced?

b) If current production is at combination C, what is the cost of 10 more wheat?

c) If current production is at combination D, what is the cost of 4 more cars?

d) Assume there is a technology change that only affects the car industry. Label this shift PPC2. (Label cars on the vertical axis and wheat on the horizontal axis and label the original production possibility curve PPC1)