Reference no: EM131176910

Problem #1

Suppose there is a relationship between park land and timber extraction of the following sort:

Park Land (00 acres) 20, 18, 14, 8, 0

Timber ($) (,000) 0, 1, 2, 3, 4

1. Draw the PPC between park land and timber extraction (fax graph if you cannot draw it in email).
2. Does it have the normal shape? (Explain in detail.)
3. What is the opportunity cost of raising timber revenue from one thousand to two thousand dollars?
4. What is the opportunity cost of raising timber revenue from three thousand to four thousand dollars?
5. Why does the opportunity cost change? Explain using the technical knowledge you learned in this chapter.
6. Share one of your experience involving opportunity cost.