1. Two producers, Alpha and Bravo, are each able to produce interactive CAD models and virtualreality (VR) sets used for technical training of Navy sailors in various ratings. Given its technology of production, it takes Alpha 8 hours of labor to generate a CAD model, and 16 hours of labor to produce a VR set.Bravo requires only 3 hours of labor to generate a CAD model, and 15 hours of labor to produce a VR set.

a. (2p) Show, in the same graph, theproduction possibility frontier (PPF)for each producer if they each have 240 hours of labor available each month. Label the graph.

b. (1p) Which producer has theabsolute advantagein producing a VR set? ________ CAD model? __________Justify your answer:

c.(2p) Fill in the able each producer'sopportunity costof producing one CAD model and VR set.

Alpha Bravo

Opp. Cost for producing one CAD model ____________________ _________________

Opp. Cost for producing one VR set ____________________ __________________

d.(2p) Which producer has thecomparative advantagein producing a VR set? ______________ Which producerspecializesin making VR sets?_________________ Justify your answer:

e.(1p) What is the trading range for VR sets in terms of CAD models?

f.(2p) Alpha loses some administrative staff due to retirement.Instead of filling those vacancies, it decides to ask its engineers to pick up some of the workload from the lost administrative staff, because "they are smart enough to figure it out those tasks". Is this a good idea? ______ What concept(s) can be used to gain insight into the issue? _____________Discuss briefly.