HW.A:2.1: Chapter 2- Aplia Homework Back to Assignment Attempts: Average:5 5. Opportunity cost and production possibilities Juarita is a skil ed tcy maker who is able to produce both cars and d ?ms. Sne has s ncurs a day to roc uce toys. The following table shows the daily cutput resultung from vanous possible combinations of her time. Hours Producing Produced Choice (Cars) (Drms (Cars) (Drums) 3 14 16 17 On the following graph, use the blue points (circle symbol) to plot Juanita’s initial production possibilities frontier (PPF) 30 25 Initial PPF 20 New PPF 15 10 CARS Suppose Juanita is currently using combination D, producing one car per day. Her opportunity cost of producing a second car per day is per day Suppose Juanita is currently using combination D, producing one car per day. Her opportunity cost of producing a second car per day is per day. Now, suppose Juanita is currently using combination C, producing two cars per day. Her opportunity cost of producing a third car per day is per day From the previous analysis, you can determine that as Juanita increases her production of cars, her opportunity cost of producing one more car Suppose Juanita buys a new tool that enables her to produce twice as many cars per hour as before, but it doesn’t affect her ability to produce drums Use the green points (triangle symbol) to plot her new PPF on the previous graph Because she can now make more cars per hour, Juanita’s opportunity cost of producing drums is it was previously
T he Correct Answer and Explanation is :
Let’s analyze Juanita’s Production Possibilities Frontier (PPF) scenario step by step. Based on the details provided, the data needs to be translated into the opportunity cost framework.
1. Understanding the PPF Table
From the table provided, here’s how her production combinations are structured:
| Choice | Hours on Cars | Hours on Drums | Cars | Drums |
|---|---|---|---|---|
| A | 0 | 17 | 0 | 34 |
| B | 1 | 16 | 1 | 32 |
| C | 2 | 15 | 2 | 30 |
| D | 3 | 14 | 3 | 28 |
Assuming Juanita can produce 2 drums per hour, this gives the outputs above (17×2 = 34, etc.). Also, she seems to produce 1 car per hour.
2. Opportunity Cost Calculations
(a) From combination D (1 car per day):
At point D: 1 car, 32 drums
At point C: 2 cars, 30 drums
👉 To produce 1 more car (from 1 to 2), Juanita gives up 32 – 30 = 2 drums.
📌 Opportunity cost of the 2nd car = 2 drums
(b) From combination C (2 cars per day):
At point C: 2 cars, 30 drums
At point B: 3 cars, 28 drums
👉 To produce 1 more car (from 2 to 3), she gives up 30 – 28 = 2 drums.
📌 Opportunity cost of the 3rd car = 2 drums
3. Pattern of Opportunity Cost
Since the opportunity cost (in drums) remains constant (2 drums per car) as car production increases, we conclude:
📌 Opportunity cost is constant
📌 This means the PPF is linear, not bowed.
4. Effect of New Tool (Increased Car Productivity)
Suppose Juanita can now produce 2 cars per hour (twice as many). Her 3 hours spent on cars (maximum) now give her 6 cars instead of 3. Her ability to produce drums remains unchanged.
New PPF Points (assuming same time limit of 17 hours):
| Hours on Cars | Hours on Drums | Cars | Drums |
|---|---|---|---|
| 0 | 17 | 0 | 34 |
| 1 | 16 | 2 | 32 |
| 2 | 15 | 4 | 30 |
| 3 | 14 | 6 | 28 |
5. New Opportunity Cost of Drums
Before, 1 hour used on drums = 2 drums
Now, if that hour is used on cars = 2 cars
👉 1 hour of work can either make 2 cars or 2 drums
So, opportunity cost of 1 drum = 1 car (previously, it was 0.5 car)
📌 Opportunity cost of drums has increased
📌 Juanita’s new comparative advantage is more specialized in cars
✅ Final Answers
- Opportunity cost of the 2nd car = 2 drums
- Opportunity cost of the 3rd car = 2 drums
- As Juanita increases car production, the opportunity cost stays constant
- After the new tool: opportunity cost of drums is higher than before
