The following table provides various combinations of two goods that can be produced within an economy.
Combination | Toothbrushes (Units) | Toasters (Units) |
1 | 67 | 0 |
2 | 64 | 5 |
3 | 61 | 10 |
4 | 57 | 15 |
5 | 51 | 20 |
6 | 44 | 25 |
7 | 31 | 30 |
8 | 0 | 35 |
(a) Draw the production possibility frontier.
(b) On this diagram, clearly mark:
i) An efficient point as point A
ii) An inefficient point as point B
iii) An unattainable point as point C
(c) Calculate the opportunity cost of:
i) getting 30 additional toothbrushes by moving from combination 7 to combination 3.
ii) getting 15 additional toasters by moving from combination 3 to combination 6.
(d) What is likely to cause a shift of the frontier from combination 1 to combination 2?
(e) What is likely to cause a shift of the frontier from combination 3 to the inefficient point B in (b ii)?
(f) What is likely to cause an outward shift of the frontier from any of the combinations in the table to the unattainable point C in (b iii)?
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