Atlantis is a small, isolated island in the South Atlantic. The inhabitants grow potatoes and catch fish. The accompanying table shows the maximum annual output combinations of potatoes and fish that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for potato production, there are fewer resources available for catching fish.
Maximum annual Output options | Quantity of potatoes (pounds) | Quantity of fish (pounds) |
---|---|---|
A | 1,000 | 0 |
B | 800 | 300 |
C | 600 | 500 |
D | 400 | 600 |
E | 200 | 650 |
F | 0 | 675 |
Using the data in the table, which of the following graphs depicts the production possibility frontier with potatoes on the horizontal axis and fish on the vertical axis?
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Can Atlantis produce 500 pounds of fish and 800 pounds of potatoes? Explain. Where would this point lie relative to the production possibility frontier?
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Maximum annual Output options | Quantity of potatoes (pounds) | Quantity of fish (pounds) |
---|---|---|
A | 1,000 | 0 |
B | 800 | 300 |
C | 600 | 500 |
D | 400 | 600 |
E | 200 | 650 |
F | 0 | 675 |
Assume the economy of Atlantis only produces fish (point F). Calculate the opportunity cost of producing potatoes in 200 pound increments.
Maximum annual Output options | Quantity of potatoes (pounds) | Opportunity cost of Producing potatoes in terms of fish |
---|---|---|
F | 0 | - |
E | 200 | |
D | 400 | |
C | 600 | |
B | 800 | |
A | 1,000 |
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Which of the following statements regarding the opportunity cost of producing potatoes and the production possibilities frontier is true for the island of Atlantis?
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