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.