Question Completion Status QUESTION 41 Figure 11 Production

Question Completion Status: QUESTION 41 Figure 1.1 Production Possibilities and Opportunity Costs:Linear Model versus Non-Linear Model Production Possibilities: Refining the Model 30 Timber (units/year) 20 12 9 10 Food (units/year) In the linear production possibilities model, we assume each of five equally-sized parcels of land contributes the same to the pro food and timber: 6 units of timber or 3 units of food. ntrast, in the non-linear model, we will assume that there are five different types of land in equal-sized plots and that each plot may contribute as follows to the production of FOOD or TIMBER:

Solution

a) 12 units of timber and 9 units of food.

Using the full capacity we can produce 30 units of timber and 15 units of food. 2/5 of 30 is 12 and 3/5 of 15 is 9.

b) An externality is the benefit of the market activity borne by a third party. The answer is \"A\".

c) Total cost divided by the quantity produced. ATC = TC/Q

d) 100. If there is a change in the price by 40% then the change in the quantity demanded will be 40 x 2.5 = 100.