ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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**Question 3**

**Production Possibility Frontier (PPF) Table:**

| Production Point | Mountain Bikes | Beer |
|------------------|----------------|------|
| A                | 0              | 100  |
| B                | 30             | 90   |
| C                | 50             | 70   |
| D                | 60             | 40   |
| E                | 65             | 0    |

**Scenario Description:**

Refer to the table above. If you were to plot the points, then this would be a ___ PPF, so when you try to produce 5 more mountain bikes from 60 to 65, the opportunity cost of beer will ___ at a higher rate.

**Answer Options:**

a) straight-line; increase  
b) straight-line; decrease  
c) curved; decrease  
d) curved; increase  

**Explanation:**

The table lists different production points, showing the trade-off between producing mountain bikes and beer. As production moves from point A to E, changes in the quantities of mountain bikes and beer reflect shifts in resource allocation. The question assesses understanding of PPF shapes (straight or curved) and the opportunity cost, particularly how it changes when moving production points, such as producing more mountain bikes and fewer beers.
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Transcribed Image Text:**Question 3** **Production Possibility Frontier (PPF) Table:** | Production Point | Mountain Bikes | Beer | |------------------|----------------|------| | A | 0 | 100 | | B | 30 | 90 | | C | 50 | 70 | | D | 60 | 40 | | E | 65 | 0 | **Scenario Description:** Refer to the table above. If you were to plot the points, then this would be a ___ PPF, so when you try to produce 5 more mountain bikes from 60 to 65, the opportunity cost of beer will ___ at a higher rate. **Answer Options:** a) straight-line; increase b) straight-line; decrease c) curved; decrease d) curved; increase **Explanation:** The table lists different production points, showing the trade-off between producing mountain bikes and beer. As production moves from point A to E, changes in the quantities of mountain bikes and beer reflect shifts in resource allocation. The question assesses understanding of PPF shapes (straight or curved) and the opportunity cost, particularly how it changes when moving production points, such as producing more mountain bikes and fewer beers.
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