Susan is a skilled toy maker who is able to produce both boa

Susan is a skilled toy maker who is able to produce both boats and puzzles. 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) (Puzzles) (Boats) (Puzzles) 4 10 16 18 19 4 4 6 On the following graph, use the blue points (circle symbol) to plot Susan\'s initial production possibilities frontier (PPF) 30 25 Initial PPF 20 New PPF 15 10 BOATS

Solution

In combination D she devotes 2 hrs for boats and 6 hrs for puzzles i.e. if he produces one more boat then 2 hrs invested in which he would have made 6 puzzles (18/6)*2=6 puzzles

Answer is opportunity cost is 6 puzzles per day.

In point C he is investing 4 hrs for boats and 4 hours for puzzles ( making 2 boats and 16 puzzles) hence if he makes one more boat i.e. to invest more 2 hrs in which we would have produced 8 puzzles.

Opportunity cost is 8 puzzles per day.

Opportunity cost of producing one more boat is decreasing

If ability of producing puzzles is unaffected then opportunity cost increases

hence opportunity cost of producing puzzles is higher than previously before.