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1. Assume that a small economy faces the different production possibilities below. Onion (in metric tons) Palay (in metric tons 0 342,138 128,520 214,200 282,744

1. Assume that a small economy faces the different production possibilities below. Onion (in metric tons) Palay (in metric tons 0 342,138 128,520 214,200 282,744 334,152 359,856 322,593 293,275 244,413 176,005 97,825 385,560 0 A. Plot the production possibilities frontier. Place the amounts of palay and onion production on the y-axis and x-axis respectively. Label each combination as points A, B, C, ..., G, and the graph as PPF. B. Solve for the marginal rate of transformation (MRT) for combinations A D; D E; E B; BC; C F; and FG. Round-up to two decimals and show complete solutions. C. Interpret the MRT for B C and F G. D. Does PPF show tradeoff? Explain. E. PPF shows constant opportunity costs. True or False? Justify. F. Illustrate the following effects on the graph on A. a. The government supported palay farmers by granting them subsidies. Label this as PPF2. b. A strong typhoon landed on the palay and onion fields. Label this as PPF3

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