The production possibilities curve for 2018 and 2022.
Explanation of Solution
Figure 1 shows the production possibilities curve for 2018 and 2022.
Figure 1
In the above graph, the vertical axis measures the quantity of Powerwall batteries and the horizontal axis measures the quantity of Model 3 sedan’s batteries. In 2018, the maximum production is 600 thousands of Model 3 sedan’s batteries or 600 thousands Powerwall batteries. In 2022, the maximum production is 600 thousands of sedan 3 batteries or 900 thousands power wall batteries.
Thus, the opportunity cost of producing one Model 3 sedan’s battery in 2018 is 1Powerwall battery.
Opportunity cost of producing one Model 3 sedan’s battery in 2022 is calculated as follows:
Thus, the opportunity cost of producing one Model 3 sedan’s battery in 2022 is 1.5 Powerwall batteries.
Concept introduction:
Opportunity cost: Opportunity cost refers to the value of forgone goods and services to receive the other goods and services.
Production Possibilities Frontier (
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Chapter 2 Solutions
Microeconomics (7th Edition)
- Suppose Ireland produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities frontier for corn, an agricultural good, and industrial robots, a capital good. Drag the production possibilities frontier (PPF) on the graph to show the effects of a long drought that reduces the amount of water available for farmers to use for irrigation. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. 120 100 PPF 80 20 PPE 60 120 180 240 300 360 CORN (Millions of bushels) INDUSTRIAL ROBOTS (Thousands)arrow_forwardSupermarché Jean Claude has decided to manufacture its own brand of non-alcoholic beverages, called NAB, and chocolate bars, called S-JC. A certain amount of money has been allocated to the production of these two products. Jean Claude believes in the old saying that a picture is worth a thousand words, and once again, he has called on you. This time, he wants to see diagrams that illustrate the effects of each of the following events on the production possibilities for NABS and S-JCs so he can visualize the situation. (a) A new and more efficient method of producing non-alcoholic beverages is discovered. (b) The demand for both non-alcoholic beverages and chocolate bars increases. (c) More workers are hired to produce S-JCs. (d) Resources are transferred from S-JC production to NAB production. (e) All workers are trained so that the quality of their labour services improves. Instructions Produce the series of graphs with accompanying texts (150-175 words) so that Uncle Jean Claude…arrow_forwardSuppose the Netherlands produces two types of goods: agricultural and capital. The following diagram shows its current production possibilities curve (also known as the production possibilities curve) for alfalfa, an agricultural good, and cars, a capital good. Drag the production possibilities curve (PPC) on the graph to show the effects of an agricultural innovation that increases the crop yield of each hectare of land. Note: Select either end of the curve on the graph to make the endpoints appear. Then drag one or both endpoints to the desired position. Points will snap into position, so if you try to move a point and it snaps back to its original position, just drag it a little farther. (? 540 450 PPC 360 270 O 180 90 PPC 50 100 150 200 250 300 ALFALFA (Millions of bushels) CARS (Thousands)arrow_forward
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