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a) Gerry is a chef in a popular restaurant. He has limited time to help prepare for a party. Study the table below, which shows Gerry's production possibilities. Calculate the opportunity cost of going from producing 2 sandwiches to 3 sandwiches. Show your work.

\begin{tabular}{|c|c|}
\hline
Sandwiches & Desserts \\
\hline
0 & 10 \\
\hline
1 & 9 \\
\hline
2 & 6 \\
\hline
3 & 0 \\
\hline
\end{tabular}

b) Draw a correctly labeled PPC using the data from the table above.

c) Does this PPC indicate increasing, decreasing, or constant opportunity cost? Explain.

d) Think of two goods that might have a constant opportunity cost of production. Draw and label a PPC for them. You do not need to make a table or define specific data quantities on the axes. Label which good is represented on each axis.

e) On your graph from part d, label an efficient and inefficient point of production (two separate points).



Answer :

GinnyAnswer
### Part a: Calculating the Opportunity Cost

To calculate the opportunity cost of going from producing 2 sandwiches to 3 sandwiches, observe the number of desserts foregone:

1. When producing 2 sandwiches, the number of desserts is 6.
2. When producing 3 sandwiches, the number of desserts is 0.

The opportunity cost is the difference in the number of desserts:

Opportunity Cost = Desserts when producing 2 sandwiches - Desserts when producing 3 sandwiches
Opportunity Cost = 6 - 0
Opportunity Cost = 6

Thus, the opportunity cost of increasing production from 2 to 3 sandwiches is 6 desserts.

### Part b: Drawing the PPC

To draw a properly labeled Production Possibilities Curve (PPC):

1. Draw two perpendicular axes. Label the horizontal axis "Sandwiches" and the vertical axis "Desserts."
2. Plot the points given in the table:
- (0, 10)
- (1, 9)
- (2, 6)
- (3, 0)
3. Connect these points with a smooth, concave curve to represent the trade-offs in production.

Here is how you should label the graph:

```
Desserts
|
10 -|
|
9 -| ○
|
|
6 -| ○
|
0 -|___________________
0 1 2 3 Sandwiches
○ ○ ○
```

### Part c: Opportunity Cost Type

This PPC indicates increasing opportunity cost. This is because, for every additional sandwich produced, the number of desserts that must be given up increases. For example:

- Moving from 0 to 1 sandwich costs 1 dessert.
- Moving from 1 to 2 sandwiches costs 3 desserts.
- Moving from 2 to 3 sandwiches costs 6 desserts.

The opportunity cost increases as more sandwiches are produced.

### Part d: Constant Opportunity Cost

For two goods with a constant opportunity cost of production, the PPC would be a straight line. This indicates that the rate at which one good can be traded for another remains constant.

Consider two hypothetical goods:
- Good A (x-axis)
- Good B (y-axis)

Here's how to draw and label the PPC for goods with a constant opportunity cost:

```
Good B
|
|
|
|
|
|
|
|
0 -|____________________
0 Good A
```
Draw a straight line from the origin (0,0) to some point on the graph to represent the constant opportunity cost.

### Part e: Efficient and Inefficient Points

1. Efficient Production Point: This point lies on the PPC line, where resources are fully utilized. Label this point "E."

2. Inefficient Production Point: This point lies inside the PPC curve, where resources are underutilized. Label this point "I."

On the same graph from part d, these points would be plotted as follows:

```
Good B
|
|
|
| I
| E
|
0 -|____________________
0 Good A
```

- Point E indicates efficient production.
- Point I indicates inefficient production.

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