Use the following table to work Problems 1 to 2. Suppose that Yucatan's production possibilities are Food Sunscreen
|
Food
|
Sunscreen
|
|
(pounds per month)
|
(gallons per month)
|
|
300
|
and
|
0
|
|
200
|
and
|
50
|
|
100
|
and
|
100
|
|
0
|
and
|
150
|
1. a. Draw a graph of Yucatan's PPF and explain how your graph illustrates a tradeoff.
b. If Yucatan produces 150 pounds of food per month, how much sunscreen must it produce if it achieves production efficiency?
c. What is Yucatan's opportunity cost of producing 1 pound of food?
d. What is Yucatan's opportunity cost of producing 1 gallon of sunscreen?
e. What is the relationship between your answers to parts (c) and (d)?
2. What feature of a PPF illustrates increasing opportunity cost? Explain why Yucatan's opportunity cost