A country produces only bananas and robots. If it produced only bananas with all its available resources, it could make 60 million units. If it produced only robots, it would produce 20 million units.


Graph the production possibilities curve for this country, assuming constant opportunity cost between the two goods—place bananas on the vertical axis and robots on the horizontal axis. Indicate a point on your graph, labeled A, that represents full employment and a possible combination in which both goods are being produced.

My Response: Understanding that every 15 million units of bananas equals 5 million units of Robots, now looking at my graph, you can see that the point labeled A means that at full employment, producing 50% of both goods gives you 30 million units of bananas and 10 million units of Robots.

What is this country's opportunity cost for producing a robot? Explain.
My Response: If we divide 60 Million / 20 Million = 3. So the opportunity cost for producing a robot is 3.

What would the area beyond (outside of) the country's PPC represent?
My Response: The area beyond the country’s PPC basically means the country is not able to produce in that area because it doesn't have the resources to do so. It's impossible or currently unattainable with the setup it has. Needs to improve “Factors of Production”

Assume that the country enters a recession. Label a point that could correspond to its output on your graph, labeling it B.
My Response:

Assume that a new fertilizer increases the efficiency of producing bananas. The productive capacity of robots is unaffected. Illustrate the impact of this change on your graph from part (a). Use an arrow to indicate the direction of the change.
My Response:

Another country with constant opportunity cost can produce 80 million units of bananas with all of its available resources or 10 million units of robots with all of its available resources. Calculate the opportunity cost for this country to produce 2 million units of robots.
My Response: