Share
Explore BrainMass

Opportunity cost (macroeconomics)

Atlantis is a small, isolated island in the South Atlantic. The
inhabitants grow potatoes and catch fresh 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 Quantity of potatoes Quantity of fish
output options (pounds) (pounds)
A 1,000 0
B 800 300
C 600 500
D 400 600
E 200 650
F 0 675
c.What is the opportunity cost of increasing the annual
output of potatoes from 600 to 800 pounds?
d. What is the opportunity cost of increasing the annual
output of potatoes from 200 to 400 pounds?
e. Can you explain why the answers to parts c and d are not
the same? What does this imply about the slope of the
production possibility frontier?
I understood how to do a and b but i am not for sure about. From my understanding if you increase the potatoes the fish will decrease.

Solution Preview

c.

The opportunity cost of increasing annual output of potatoes from 600 to 800 is 200 pounds of fish. If Atlantis increases output from 600 to 800 pounds of potatoes, it has to cut fish production from ...

Solution Summary

A step by step solution is provided.

$2.19