For the first question the options are ( 1 drum, 3 drums , 16 drums, 19 drums)For the second one it’s ( 1 drum, 6 drums, 10 drums, 16 drums)For the third question it is ( decreases, increases, remains constant)For the final question the choices are (higher than, lower than, the same as) 5. Opportunity cost and production possibilitiesAna is a skilled toy maker who is able to produce both boats and drums. She has 8 hours a day to produce toys. The following table shows the dailyoutput resulting from various possible combinations of her time.Hours ProducingProducedChoice(Boats)(Drums)(Boats)(Drums)A8.42.3.10C4.416D11920On the following graph, use the blue points (circle symbol) to plot Ana's initial production possibilities frontier (PPF).(?3025Initial PPF20New PPF1510DRU MS On the following graph, use the blue points (circle symbol) to plot Ana's initial production possibilities frontier (PPF).(?)25Initial PPFNew PPF151018BOATSSuppose Ana is currently using combination D, producing one boat per day. Her opportunity cost of producing a second boat per day isv per day.Now, suppose Ana is currently using combination C, producing two boats per day. Her opportunity cost of producing a third boat per day isper day.From the previous analysis, you can determine that as Ana increases her production of boats, her opportunity cost of producing one more boatSuppose Ana buys a new tool that enables her to produce twice as many boats 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 boats per hour, Ana's opportunity cost of producing drums isit was previously.DRU MS20

Answered: On the following graph, use the blue…

Principles of Economics 2e

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Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter7: Production, Costs, And Industry Structure

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For the first question the options are ( 1 drum, 3 drums , 16 drums, 19 drums) For the second one it’s ( 1 drum, 6 drums, 10 drums, 16 drums) For the third question it is ( decreases, increases, remains constant) For the final question the choices are (higher than, lower than, the same as)

5. Opportunity cost and production possibilities
Ana is a skilled toy maker who is able to produce both boats and drums. She has 8 hours a day to produce toys. The following table shows the daily
output resulting from various possible combinations of her time.
Hours Producing
Produced
Choice
(Boats)
(Drums)
(Boats)
(Drums)
A
8.
4
2.
3.
10
C
4.
4
16
D
1
19
20
On the following graph, use the blue points (circle symbol) to plot Ana's initial production possibilities frontier (PPF).
(?
30
25
Initial PPF
20
New PPF
15
10
DRU MS

On the following graph, use the blue points (circle symbol) to plot Ana's initial production possibilities frontier (PPF).
(?)
25
Initial PPF
New PPF
15
10
1
8
BOATS
Suppose Ana is currently using combination D, producing one boat per day. Her opportunity cost of producing a second boat per day is
v per day.
Now, suppose Ana is currently using combination C, producing two boats per day. Her opportunity cost of producing a third boat per day is
per day.
From the previous analysis, you can determine that as Ana increases her production of boats, her opportunity cost of producing one more boat
Suppose Ana buys a new tool that enables her to produce twice as many boats 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 boats per hour, Ana's opportunity cost of producing drums is
it was previously.
DRU MS
20

Expert Solution

Step 1

Introduction:

The potential advantages that a person, investor, or organization foregoes by choosing one option over another are known as opportunity costs. Because opportunity costs are, by definition, invisible, they are readily missed. Understanding the possible lost opportunities when a company or individual selects one investment over another assists for improved decision-making.

Opportunity cost analysis is essential in defining a company's capital structure. A company incurs costs when it issues debt and equity capital to compensate lenders and shareholders for the risk of investing, but each also carries an opportunity cost.

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