This document provides data on the maximum combinations of food and clothing production that can be produced in a given time period. It asks the reader to draw the production possibilities frontier (PPF) curve based on the data and calculate various opportunity costs of shifting production between food and clothing. The PPF curve for this data would be bowed outwards, as increasing one good requires decreasing the other at an increasing rate. A PPF could only be a straight line if inputs were perfectly substitutable, and it cannot be bowed inwards as that would require producing more of both goods than is possible.

1. PPF and Opportunity cost questions<br />Maximum possible combinations of food and clothing that can be produced in a given period of time:<br />Units of food (millions)Units of clothing (millions)8.00.07.02.26.04.05.05.04.05.63.06.02.06.41.06.70.07.0<br />Draw a PPF for this economy.<br />What is the opportunity cost of moving from producing 4 million units of food to 5 million units of food? __________________________________________<br />What is the opportunity cost of moving from producing 6 million units of clothing to 7 million units of clothing? ________________________________<br />What is the opportunity cost of switching production from 0 units of food to 2 million units of food? _____________________________________________<br />What shape is the PPF curve in this example? Explain in your words why it is this shape. ______________________________________________________<br />_______________________________________________________________<br />In what circumstances would the PPF be a straight line? _________________<br />_______________________________________________________________<br />Could a PPF be bowed towards the origin? Explain your answer.___________<br />_______________________________________________________________<br />__________________________________________________________________________________<br />