Find the opportunity cost of increasing annual output of

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Reference no: EM13392245

St Atanagio is a remote island in the Atlantic. The inhabitants grow corn and breed poultry. The accompanying table shows the maximum annual output combinations of corn and poultry that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for corn production, there are fewer resources available for breeding poultry.

Maximum annual output options	Quantity of Corn (pounds)	Quantity of Poultry (pounds)
1	1200	0
2	1000	300
3	800	500
4	600	600
5	400	700
6	200	775
7	0	850

1. Draw a production possibility frontier with corn on the horizontal axis and poultry on the vertical axis illustrating these options, showing points 1-7.

2. Can St. Atanagio produce 650 pounds of poultry and 650 pounds of corn? Explain. Where would this point lie relative to the production possibility frontier?

3. What is the opportunity cost of increasing the annual output of corn from 800 to 1000 pounds?

4. What is the opportunity cost of increasing the annual output of corn from 200 to 400 pounds?

5. Can you explain why the answers to parts 3. and 4. above are not the same? What does this imply about the slope of the production possibility frontier?

Reference no: EM13392245

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