Thursday

August 21, 2014

August 21, 2014

Posted by **Zann** on Thursday, July 27, 2006 at 5:04am.

1) what will be the production possibility curve?

2) What will be the opportunity cost of producing 50 units of x?

How much y can the economy produce if it only makes y. The 100 units of labor can make 400 y and the 100 units of capital can make 100 y. A total of 500. Lable 500 on the y-axis of your this PPC. Start from here. If the economy gives up 1 unit of capital (1 y) it gets 4 units of x. So, your PPC gets a downward line with a slope of -1/4. After 100 units of capital, the opportunity cost changes, you the economy has to give up labor to get x; it gives up 4 units of y to get 1 x. So, your PPC gets a downward line with a slope of -4. In the end, your PPC crosses the x and y axis at 500 each.

Use the graph to answer #2.

- Economics -
**Anonymous**, Wednesday, October 20, 2010 at 9:35amuybgvglguv

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