A farmer's feasible frontier for producing wheat and barley is represented by a downward-sloping curve that is bowed outwards from the origin (concave). Wheat is on the vertical axis and barley is on the horizontal axis. The farmer is currently producing a combination of mostly wheat and very little barley. If the farmer decides to shift production to produce one additional ton of barley, how will the opportunity cost of this decision (in terms of wheat given up) compare to the opportunity cost

Evaluating a Production Model

Analyzing Production Scenarios

Imagine two companies, Company A and Company B, both sell very similar brands of bottled water. If Company A decides to significantly increase the price of its bottled water, what is the most likely immediate effect on the market for Company B's bottled water, assuming all other factors remain constant?

A small island nation can produce two goods: coconuts and computer chips. The skills and equipment required for harvesting coconuts are very different from those needed for manufacturing computer chips. As the nation shifts more of its resources from coconut harvesting to chip manufacturing, it must re-purpose land and retrain workers who are progressively less suited for the new industry. Which of the following statements best describes the nation's feasible production frontier and the opportun

Consider two different production scenarios. In Scenario A, a factory can produce either blue widgets or red widgets using the same machinery and workers, who are equally skilled at making both. For every 10 blue widgets not produced, they can make exactly 15 red widgets. In Scenario B, a country uses its resources to produce either agricultural goods or smartphones. The land is highly fertile but not suitable for building factories, and the workers are either skilled farmers or specialized engi

A country's feasible production frontier for consumer goods (vertical axis) and capital goods (horizontal axis) is a curve that is bowed outwards from the origin. Consider two potential shifts in production, both of which involve increasing the output of capital goods by the exact same amount (e.g., by 100 units).

• Shift 1: Moving from a point where many consumer goods and few capital goods are produced.
• Shift 2: Moving from a point where fewer consumer goods and many capital goods are alrea

A company produces two very similar products, Product A and Product B, using the same machinery and workers who are equally skilled at making both. The company's production manager claims that the opportunity cost of producing one more unit of Product A (in terms of the quantity of Product B that must be given up) will increase as the company shifts more of its resources towards producing Product A. This claim is correct.

Match each production scenario with the description of its feasible frontier and the nature of its opportunity cost.

Feasible Frontiers for a Bakery