Draw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F.Option missiles butter A 0 30 B 1 28 C 2 24 D 3 18 E 4 10 F 5 0 Can this country produce 24 units of butter and 4 missiles? Explain. Where would this point lie on the PPF?What is the trade-off when moving from point A to B?What is the opportunity cost of increasing missile production from 3-4 units?what is the opportunity cost of increasing butter production from 18-24 units?What is the maximum amount of butter that can be produced, if all resources are devoted to butter production?Can this country produce 2 missiles and 10 units of butter? Yes or no? Where would this point lie relative to the PPF? Suppose the information given in question 1 represents the PPF1. Draw a new PPF diagram and illustrate what happens when the missile sector experiences an increase in new resources and technology. Show both PPF1 and PPF2 on your graph.

Name: Draw a production possibilities frontier (PPF) with missiles on the ho
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Description: Draw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F.Option missiles butter A 0 30 B

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ECON MACRO

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ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter2: Economic Tools And Economic Systems

Section: Chapter Questions

Problem 3.5P

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Draw a production possibilities frontier (PPF) with missiles on the horizontal axis and butter on the vertical axis, illustrating these options, showing points A – F.

Option missiles butter

A 0 30

B 1 28

C 2 24

D 3 18

E 4 10

F 5 0

1. Can this country produce 24 units of butter and 4 missiles? Explain. Where would this point lie on the PPF?
2. What is the trade-off when moving from point A to B?
3. What is the opportunity cost of increasing missile production from 3-4 units?
4. what is the opportunity cost of increasing butter production from 18-24 units?
5. What is the maximum amount of butter that can be produced, if all resources are devoted to butter production?
6. Can this country produce 2 missiles and 10 units of butter? Yes or no? Where would this point lie relative to the PPF?

Suppose the information given in question 1 represents the PPF1. Draw a new PPF diagram and illustrate what happens when the missile sector experiences an increase in new resources and technology. Show both PPF1 and PPF2 on your graph.

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