PPF Worksheet

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CIA4U0 – Analyzing Current Economic Issues
Name: __________________________
Production Possibilities Frontier
Worksheet
1. Farmer Brown has four fields that can produce corn or tobacco. Assume that the trade-off
between corn and tobacco within each field is constant. The maximum yields are given in this
table:
Field
Corn
Tobacco
A
40
10
B
30
20
C
20
30
D
10
40
a. Draw Farmer Brown's ppf.
b. To be on the ppf, what conditions must hold true?
c. Brown is currently producing only corn: if he wants to produce some tobacco, in what order
would he switch his fields from corn to tobacco production? What law does this represent?
Explain.
2. The following data give the production possibilities of an economy that produces two types of
goods, cloth (horizontal axis) and wheat (vertical axis).
Production
Possibilities
A
B
C
D
E
F
G
Cloth
Wheat
0
10
20
30
40
50
60
105
100
90
75
55
30
0
a. Graph the production possibilities frontier.
b. Explain why Point D is efficient while Point H is not.
c. Indicate by drawing an 'X' where production is unattainable. To achieve this currently
unattainable production combination, what must happen (two possible answers)?
CIA4U0 – Analyzing Current Economic Issues
Name: __________________________
d. Calculate the opportunity cost of an increase in the production of cloth, or the production of
wheat, in each of the following cases.
From Point A to Point B?
From Point F to Point E?
From Point C to Point D?
3. Draw a production possibility curve for each of the following cases (products – wheat & dairy).
Illustrate what will happen to the production possibilities frontier, in each case.
There is an new tractor invented which improves
wheat farming techniques.
There is a decrease in the quantity of physical
capital.
There is an improvement in farming techniques.
The productivity of workers double.
The government requires farmers to slaughter a
portion of their dairy herds.
There is a new hormone introduced to cows which
will allow for increased yields.
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