Diagrams 1 and 2 below depict the production possibility frontier (PPF) for Rosie’s Bakery. Answer the questions below and show all calculations where appropriate. Explain in one paragraph how the PPF curve in Diagram 1 depicts the problem of scarcity for Rosie’s Bakery. Which points in Diagram 1 represent efficiency? Explain. “Every point on the PPF in Diagram 1 involves a trade-off.” Explain this by comparing a combination of related changes in values on the graph. From Diagram 1, calculate the opportunity cost of increasing the production of cakes from 8 to 12 with the opportunity cost of increasing the production of cakes from 12 to 14. Show all calculations. In Diagram 2, how would explain the shift from PPF1 to PPF2 at Rosie’s Bakery using economic theory?

Diagrams 1 and 2 below depict the production possibility frontier (PPF) for Rosie’s Bakery. Answer the questions below and show all calculations where appropriate. Explain in one paragraph how the PPF curve in Diagram 1 depicts the problem of scarcity for Rosie’s Bakery. Which points in Diagram 1 represent efficiency? Explain. “Every point on the PPF in Diagram 1 involves a trade-off.” Explain this by comparing a combination of related changes in values on the graph. From Diagram 1, calculate the opportunity cost of increasing the production of cakes from 8 to 12 with the opportunity cost of increasing the production of cakes from 12 to 14. Show all calculations. In Diagram 2, how would explain the shift from PPF1 to PPF2 at Rosie’s Bakery using economic theory?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

ChapterA: The Use Of Mathematics In Principles Of Economics

Section: Chapter Questions

Problem 3RQ: Exercise A3 What dome slices of a pie chart represent?

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