St. Antagios

Unit 2 Assignment: St Atanagio

Name: - Jessica Fults

Course Number: - BU-224

Section Number: -

Unit Number: - 2

Date: - August 13, 2013

St Atanagio is a remote island in the Atlantic. The inhabitants grow corn and breed poultry. The accompanying table shows the maximum annual output combinations of corn and poultry that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for corn production, there are fewer resources available for breeding poultry.

Maximum annual output options | Quantity of Corn(pounds) | Quantity of Poultry(pounds) |

1 | 1200 | 0 |

2 | 1000 | 300 |

3 | 800 | 500 |

4 | 600 | 600 |

5 | 400 | 700 |

6 | 200 | 775 |

7 | 0 | 850 |

1. Draw a production possibility frontier with corn on the horizontal axis and poultry on the vertical axis illustrating these options, showing points 1–7.

2. Can St. Atanagio produce 650 pounds of poultry and 650 pounds of corn? Explain. Where would this point lie relative to the production possibility frontier?

Yes, because it falls right on the PPF so it would be feasible and efficient to produce that many of each.

3. What is the opportunity cost of increasing the annual output of corn from 800 to 1000 pounds?

The opportunity cost is giving up 200 pounds of poultry

4. What is the opportunity cost of increasing the annual output of corn from 200 to 400 pounds?

The opportunity cost is giving up 75 pounds of poultry.

5. Can you explain why the answers to parts 3 and 4 above are not the same? What does this imply about the slope of the production possibility frontier?

The reason that they are both different is because going from 800 to 1000 pounds of is doubling going from 200 to 400 pounds of corn being made so it’s less efficient. This shows that the PPF shows people things that they might not think is there. It shows how efficient a company is being.

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