Practice: Production Possibilities Frontier

What do points along the production possibilities frontier represent?

• Attainable but Inefficient

• Attainable

• Attainable and Efficient

• Unattainable

To achieve unattainable production combinations, what must happen (give two possible answers)?

• Changes in profit

• Changes in resources

• Changes in capital goods

• Changes in technology

Explain why Point D is efficient while Point H (located inside the graph) is not.

• Point D represents unattainable combinations, given the resources and the technology available. While Point H does not employ resources fully.

• Point H represents unattainable combinations, given the resources and the technology available. While Point D does not employ resources fully.

• Point H represents the amount of coconuts produced if all the economy’s resources are used to efficiently to produce coconuts. While Point D does not employ resources fully.

• Point D represents the amount of coconuts produced if all the economy’s resources are used to efficiently to produce coconuts. While Point H does not employ resources fully.

Calculate the per-unit opportunity cost of an increase in the production of Apple Watches, or the production of iPhones, in each of the following cases:

Calculate the per-unit opportunity cost from Point A to Point B?

• 0 Apple Watches

• 10 Apple Watches

• 5 iPhones

• 105 iPhones

Calculate the per-unit opportunity cost of an increase in the production of Apple Watches, or the production of iPhones, in each of the following cases:

Calculate the per-unit opportunity cost from Point F to Point E?

• 55 iPhones

• 25 iPhones

• 40 Apple Watches

• 10 Apple Watches

Calculate the per-unit opportunity cost of an increase in the production of Apple Watches, or the production of iPhones, in each of the following cases:

Calculate the per-unit opportunity cost from Point C to Point D?

• 55 iPhones

• 15 iPhones

• 10 Apple Watches

• 30 Apple Watches

Calculate the per-unit opportunity cost of an increase in the production of Apple Watches, or the production of iPhones, in each of the following cases:

Calculate the per-unit opportunity cost from Point G to Point B?

• 0 iPhones

• 100 iPhones

• 10 Apple Watches

• 50 Apple Watches

In each of the following cases, explain what will happen to the production possibilities frontier (e.g., the production possibilities curves shifts outwards/inwards):

Apple experiences massive power outages in its main production factory

• The production possibility curve shifts outward

• The production possibility curve shifts inward

In each of the following cases, explain what will happen to the production possibilities frontier (e.g., the production possibilities curves shifts outwards/inwards):

The productivity of all workers increase

• The production possibility curve shifts outward

• The production possibility curve shifts inward

In each of the following cases, explain what will happen to the production possibilities frontier (e.g., the production possibilities curves shifts outwards/inwards):

New technology makes it more efficient and less dangerous to mine cobalt

• The production possibility curve shifts outward

• The production possibility curve shifts inward