# Economics and Annual Output

Topics: Economics, Microeconomics, Opportunity cost Pages: 2 (428 words) Published: January 2, 2013
Renee Legan-Farrell
BU 224 Microeconomics
Unit 2
Assignment 2
December 14, 2012

Unit 2 Homework - Template

St Atanagio is a remote island in the Atlantic. The inhabitants grow corn and breed poultry. The accompanying table shows the maximum annual output combinations of corn and poultry that can be produced. Obviously, given their limited resources and available technology, as they use more of their resources for corn production, there are fewer resources available for breeding poultry.

Maximum annual output options| Quantity of Corn(pounds)| Quantity of Poultry(pounds)| 1| 1200| 0|
2| 1000| 300|
3| 800| 500|
4| 600| 600|
5| 400| 700|
6| 200| 775|
7| 0| 850|

1. Draw a production possibility frontier with corn on the horizontal axis and poultry on the vertical axis illustrating these options, showing points 1–7.

2. Can St. Atanagio produce 650 pounds of poultry and 650 pounds of corn? Explain. Where would this point lie relative to the production possibility frontier?

St. Atanagio cannot produce 650lbs of poultry and 650lbs of corn; due to the fact that there are not enough recourses to produce those amounts. By the chart I was able to use this point would be just above the 600lbs of corn and poultry but would be in the area of not efficient due to the fact that there are not enough recourse or even labor to produce this much.

3. What is the opportunity cost of increasing the annual output of corn from 800 to 1000 pounds?
The opportunity cost of increasing the annual output of corn from 800 to 1000 is 200lbs of poultry.

4. What is the opportunity cost of increasing the annual output of corn from 200 to 400 pounds?

The opportunity cost of increasing the annual output of corn from 200 to 400 is 75lbs of poultry.

5. Can you explain why the answers to parts...