The figure represents the possibility curve of a nation, Use it to answer the questions that follow
(a) What is the opportunity cost of: i. producing 30 units of cocoa; ii. increasing textile production from 30 to 40 bales? (b) interpret the following points as found in the graph: i. point Y ii. point G iii. point X (c) List three conditions that can enable the nation to produce at point X. (d) State two basic economic concepts illustrated in the diagram above. (e) i. Define production possibility curve ii. What does the slope of the production possibility curve Indicate?
Explanation
(a)i. The opportunity cost of producing 30 tons of cocoa IS sacrificing 60 bales of textile. ii. The opportunity cost of increasing textile production from 30 t0 40 bales is sacrificing/reducing cocoa production by 5 tons or from 25 to 20 tons or (25-20) (b) i. Point Y represents the underemployment of resources since it lies within the curve. ii. Point G represents full employment of resources because it lies on the curve. iii. Point X represents an unattainable point because it lies outside the curve. (c) i. Use of advanced technology ii. Research and Inventions. iii. New discovery of resources iv. Increased investment v. Reduction in waste or misallocation of resources. vi. Growth in the economy vii. Human resource development. (d) Scarcity, choice, opportunity cost. (e) i. The production possibility curve is a curve that shows the various combinations of goods and services that a country can produce, using available resources and the most efficient production technique. ii. The slope of the production possibility curve indicates that to produce more of one commodity (textile), units of the other commodity (cOc0a) must be sacrificed, or there is an opportunity cost involved in the reproduction of textile and cocoa.
