Chapter 1. Section 1, Problem 8

Step 1

Work It Out
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You must read each slide, and complete any questions on the slide, in sequence.

Question

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
Table
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1:16

Step 2

Question

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1:34

Step 3

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
Table

Question

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 umtCjsP7rSENfBJaT4jiWW5cFfc=
D 400 3kWgAzDPl7+1jYG3gkc6rqBpvFI=
C 600 wiwMMLS1GL0C3Snq6EpFNChLaS4=
B 800 xTp3ztpprOZgQpPXo58zjY68L1M=
A 1,000 Vfrb19FEP2MHqM8jpRfoPFtudFM=
Table
To calculate the opportunity cost of producing potatoes (in terms of producing fish) you must calculate the change in quantity of fish produced as potato production is increased. For example, as potato production increases from 0 to 200 pounds, fish production decreases from 675 to 650 pounds. So the opportunity cost of producing the first 200 pounds of potatoes is 25 pounds of fish. Similarly when increasing potato production from 200 to 400 pounds, the result is a decrease in fish production from 650 to 600 pounds. Increasing potato production from 600 to 800 pounds results in a decrease in the production of fish from 500 to 300 pounds, or an opportunity cost of 200 pounds of fish.
Assume the economy of Atlantis only produces fish (point F). Calculate the opportunity cost of producing potatoes in 200 pound increments.
4:13

Step 4

Question

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