I have created an accurate graph on excel and I believe the answers to the first 2 portions of the question are:
The opportunity cost of the first 2,000 automobiles is the inability to produce 1000 tons of beef or we give up 1000 tons of beef in order to produce 2,000 automobiles.
The opportunity cost per thousand tons of beef is highest between points E and D – at these points the cost of producing 2,000 cars (the number of cars produced between point D and E) means the loss of 4,000 tons of beef – down to zero production as 8,000 automobiles are produced.
I am unsure of the third part because the difference between the points is the same!
Here is the question!
Problem Set – Chapter 2 – FA2009
1. The following is a set of hypothetical production possibilities for a nation.
Combination
Beef (thousands of tons) Automobiles (thousands)
A 10 0
B 9 2
C 7 4
D 4 6
E 0 8
a. Plot (EXCEL directions are on this site.) these production possibilities data, placing automobiles on the horizontal axis. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest? (10 pts).
a. Plot (EXCEL directions are on this site.) these production possibilities data, placing automobiles on the horizontal axis. What is the opportunity cost of the first 2,000 automobiles produced? Between which points is the opportunity cost per thousand automobiles highest? Between which points is the opportunity cost per thousand tons of beef highest? (10 pts)
It IS annoying, perhaps, that you can not "cut and paste" but that's the way it is!
Sra
To plot the production possibilities data in Excel, you can follow these steps:
1. Open Excel and create a new spreadsheet.
2. Label column A as "Beef (thousands of tons)" and column B as "Automobiles (thousands)".
3. Enter the values for Beef and Automobiles in the corresponding cells for combinations A to E:
Combination | Beef (thousands of tons) | Automobiles (thousands)
------------|-------------------------|------------------------
A | 10 | 0
B | 9 | 2
C | 7 | 4
D | 4 | 6
E | 0 | 8
4. Select the cells A1 to B6 (including the headers and data).
5. Click on the "Insert" tab in the Excel ribbon.
6. In the "Charts" section, click on the "Scatter" chart type and select the "Scatter with Straight Lines" option.
7. Excel will generate the production possibilities graph for you.
Now, let's determine the opportunity costs.
The opportunity cost of the first 2,000 automobiles produced can be calculated by finding the difference in the quantity of beef produced between combinations B and A.
Opportunity Cost = Beef at Combination B - Beef at Combination A
= 9,000 tons - 10,000 tons
= -1,000 tons
Therefore, the opportunity cost of the first 2,000 automobiles is the inability to produce 1,000 tons of beef, or giving up 1,000 tons of beef to produce 2,000 automobiles.
To find the points between which the opportunity cost per thousand automobiles is highest, you can calculate the opportunity cost for each combination and divide it by the number of automobiles for that combination. Then, compare the results.
Opportunity Cost per thousand automobiles = (Beef at Combination A - Beef at Combination) / (Automobiles at Combination)
Combination B: (10,000 tons - 9,000 tons) / 2,000 = 0.5 tons/automobile
Combination C: (10,000 tons - 7,000 tons) / 4,000 = 0.75 tons/automobile
Combination D: (10,000 tons - 4,000 tons) / 6,000 = 1 ton/automobile
Combination E: (10,000 tons - 0 tons) / 8,000 = 1.25 tons/automobile
From the calculations, the opportunity cost per thousand automobiles is highest between points D and E.
To find the points between which the opportunity cost per thousand tons of beef is highest, you can calculate the opportunity cost for each combination and divide it by the amount of beef for that combination. Then, compare the results.
Opportunity Cost per thousand tons of beef = (Automobiles at Combination A - Automobiles at Combination) / (Beef at Combination)
Combination B: (2,000 automobiles - 0 automobiles) / 10 = 0.2 automobiles/ton
Combination C: (4,000 automobiles - 0 automobiles) / 9 = 0.444 automobiles/ton
Combination D: (6,000 automobiles - 0 automobiles) / 4 = 1.5 automobiles/ton
Combination E: (8,000 automobiles - 0 automobiles) / 0 = undefined (division by zero)
From the calculations, the opportunity cost per thousand tons of beef is highest between points C and D.
To plot the production possibilities data on Excel and find the opportunity cost, we can follow these steps:
1. Open Microsoft Excel and create a new spreadsheet.
2. Label the first column as "Beef (thousands of tons)" and the second column as "Automobiles (thousands)".
3. Enter the given combinations of Beef and Automobiles data from the question into the respective columns, starting from row 2. A should be in A2, B in A3, C in A4, and so on.
4. Once you have entered all the data, select the range of cells containing the data, including the headers.
5. Go to the "Insert" tab in the Excel ribbon and select the type of graph you want to create. In this case, you can choose a scatter plot or a line graph.
6. Excel will automatically generate the graph for you with the data points plotted on the horizontal and vertical axes.
To find the opportunity cost of the first 2,000 automobiles produced, we need to look at the potential production of beef that is given up. From the production possibilities data, we can see that at point E, 0 tons of beef is being produced while 8 thousand automobiles are being produced. As we move to point D, the number of automobiles produced increases to 6 thousand, and the beef production decreases to 4 thousand tons. Therefore, the opportunity cost of producing 2,000 automobiles is the inability to produce 1,000 tons of beef.
To find the points between which the opportunity cost per thousand automobiles is highest, we need to look at the changes in beef production as automobile production increases. From point E to point D, the number of automobiles increases from 0 to 6 thousand, while the beef production decreases from 0 to 4 thousand tons. Therefore, the opportunity cost per thousand automobiles is highest between points E and D.
Lastly, to find the points between which the opportunity cost per thousand tons of beef is highest, we need to look at the changes in automobile production as beef production decreases. From point D to point E, the beef production decreases from 4 to 0 thousand tons, while the automobile production increases from 6 to 8 thousand. Therefore, the opportunity cost per thousand tons of beef is highest between points D and E.