Below is a hypothetical production possibilities frontier (PPF) for the nation o

Question

Below is a hypothetical production possibilities frontier (PPF) for the nation of whoville. If whoville is producing at Point A_3 and increases the production of socks by 200,000 and moves to Point B, how many ovens must be given up? If Whoville is producing at Point B, and increases the production of socks by and 200,000 and moves to Point C. how many ovens must be given up? What does the marginal rate of transformation tell you about resource adaptability and opportunity costs for the given PPF curve when moving from Point A to Point C? Whoville faces increasing opportunity costs because resources are not perfect substitutes in the production of both types of goods. Whoville faces increasing opportunity costs because resources are perfect substitutes in the production of both types of goods. Whoville faces constant opportunity costs because resources are perfect substitutes in the production of both types of goods. Whoville faces constant opportunity costs because resources are not perfect substitutes in the production of both types of goods.

Explanation / Answer

Q.1)Whoville has to give up 50,000 ovens as at point B the production of socks increases by 200,000and production of oven decreases by 50,000.

Q.2)Whoville has to give up 150,000 ovens because at point C the production of socks increases by 200,000and production of oven decreases by 150,000.

Q.3) Whoville faces increasing opportunity costs because resources are not perfect substitutes in the production of both types of goods.

opportunity costs normally come up when an economic organization with limited resources must decide between two alternatives. there is an efficient number of the two commodities that can be produced with available resources. Therefore, it's up to the organization to look at the PPF and decide what number of each commodity should be produced to maximize the overall benefit to the economy.

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