Show all work and ALWAYS remember to label all graphs properly. Problem 1 (35 po
ID: 2506010 • Letter: S
Question
Show all work and ALWAYS remember to label all graphs properly.
Problem 1 (35 points) A country has the following production possibility table:
Resources devoted to clothing, %
Output of clothing
Resources devoted to food, %
Output of food
0
50
100
95
10
55
90
93
20
60
80
91
30
65
70
89
40
70
60
87
50
75
50
85
60
80
40
83
70
85
30
81
80
90
20
79
90
95
10
77
100
100
0
75
a. Draw the country
Resources devoted to clothing, %
Output of clothing
Resources devoted to food, %
Output of food
0
50
100
95
10
55
90
93
20
60
80
91
30
65
70
89
40
70
60
87
50
75
50
85
60
80
40
83
70
85
30
81
80
90
20
79
90
95
10
77
100
100
0
75
Explanation / Answer
a) use curve plotter, graph plotter any software to get a curve generated just put values in the graph plotter.
b. It increases. Notice that for every percentage increase in resources devoted to food, the additional output of food decreases, For the same percentage increase, the difference in the output of clothing is a constant. The marginal opportunity cost of food is equal to: the additional output of clothing divided by the additional output of food. This ratio decreases as food production increases.
c. The point where the production possibilities curve intersects the food axis will move farther away from zero. The point where it intersects the clothing axis will not change. This will shift the curve and change its shape.
d. It will shift outward, but maintain the same shape.