I'm an idiot, but please let me know where to begin here. This is a distance learning course, and I CANNOT contact the professor, and cannot make sense of it in the textbook. If someone can please look at this and let me know where to begin, I thank you VERY much.
"The following data describe the production possibilities for a farm where only peaches and apples are produced:
Apples: 0, 5000, 10000, 15000, 18000.
Peaches: 50000, 48000, 38000, 18000, 0
a. Does this farm display constant costs, decreasing costs, or increasing costs in production of fruit? Why?
b. What would PPF for this farm look like? (Would it be linear, curved inward, or curved outward?)
c. If the farm were producing 15,000 apples and 20,000 peaches, would it be operating on, inside or outside of its production possiblity frontier?
n/m.. got it done; thanks -- though I sitll don't know what I'm doing.
Dont panic, don't give up in frustration; just think in through..
First, draw, the production possibilities curve. Make a simple graph, put Apples on the y-axis, Peaches on the x axis. Plot your 5 data points; then play dot-to-dot.
b) your curve should be bowed outward.
a) Production costs, in this example, are opportunity costs. Start at 0-apples 50000 peaches. How much does it cost the farmer to get 5000 apples. Answer: he must give up 2000 peaches. Now, how much does it cost to get another 5000 apples. -- Ans: 10,000 peaches. I would say costs in production are rising.
c) 15000 apples and 20000 peaches is clearly above the PPF (How the farm gets to this production point violates the underlying notion -- but that's a point for discussion at another time).
To begin answering these questions, you will need to analyze the given data and understand the concepts of production possibilities and opportunity costs. Here's a step-by-step guide to help you:
1. Start by drawing a graph to represent the production possibilities for the farm. On the y-axis, plot the number of apples produced (0, 5000, 10000, 15000, 18000), and on the x-axis, plot the number of peaches produced (50000, 48000, 38000, 18000, 0). Connect the data points to create a curve.
2. For part (b), observe the shape of the curve you just created. If it is curved outward, it means that the farm exhibits increasing costs in production. This implies that as the farm produces more of one product (e.g., apples), the opportunity cost of producing additional units of that product increases.
3. To answer part (a), you need to consider the concept of opportunity costs. Start at the point where the farm produces 0 apples and 50000 peaches. Calculate how many peaches the farmer must give up to produce 5000 apples. In this case, it is 2000 peaches. Next, determine the additional peaches that need to be given up to produce another 5000 apples. In this case, it is 10000 peaches. Since the opportunity cost of producing more apples is increasing, the farm displays increasing costs.
4. Finally, for part (c), analyze the given combination of 15000 apples and 20000 peaches. If this point lies above the production possibility frontier (PPF), it means that it is not achievable given the farm's current resources and technology. Therefore, the farm would be operating outside of its production possibility frontier.
Remember, it's important to carefully analyze the data and understand the concepts in order to answer the questions accurately. Don't hesitate to seek further clarification if needed.