1.)Assume that there is an economy that is only producing two goods: trains and boats. The table below shows all the maximum combinations of the two goods that can be produced in this economy in a period.

Combination Trains Boats

A 80 0

B 70 50

C 50 80

D 0 100

1.1 Use the information given in the table above to draw the production possibilities curve (PPC) for this economy. (Note: Trains should be shown on the yaxis and Boats on the xaxis.)

1.2 Illustrate a point that shows scarcity on your diagram.

1.3 Illustrate a point that shows unemployment on your diagram.

1.4 What is the opportunity cost of moving from point B to C?

1.5 Explain the effect that an improvement in the technology used in the production of trains and boats will have on the economy. (Note: No graph is required)

1.6 Why it is unlikely that this economy will produce at either point A or point D?