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# Amy is a skilled toy maker who is able to produce both boats and balls. She has 8 hours a day to pro

Amy is a skilled toy maker who is able to produce both boats and balls. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time.

Choice

Hours Producing

Produced

(Boats)

(Balls)

(Boats)

(Balls)

A 8 0 4 0
B 6 2 3 10
C 4 4 2 16
D 2 6 1 19
E 0 8 0 20

Suppose Amy is currently using combination D, producing one boat per day. Her opportunity cost of producing a second boat per day is ___per day.

Now, suppose Amy is currently using combination C, producing two boats per day. Her opportunity cost of producing a third boat per day is ___ per day.

From the previous analysis, you can determine that as Amy increases her production of boats, her opportunity cost of producing one more boat (decreases/increases) .

Suppose Amy buys a new tool that enables her to produce twice as many boats per hour as before, but it doesn&#39;t affect her ability to produce balls. Use the green points (triangle symbol) to plot her new PPF on the previous graph.

Because she can now make more boats per hour, Amy&#39;s opportunity cost of producing balls is (higher than/ lower than /the same as) it was previously.

On the following graph, use the blue points (circle symbol) to plot Amy&#39;s initial production possibilities frontier (PPF) 30 25 Initial PPF 20 New PPF 15 10 5 2 3 4 5 6 7 BOATS BALLS

Apr 03 2020 View more View Less