1.The nation's largest jams and jellies processor has a major Midwestern production facility that can produce both items.Its current production capacity is four million pounds of jam per month (any variety of jam) or six million pounds of grape jelly per month.Due to some efficiencies in joint production (i.e. production possibilities), the facility is currently producing four million pounds of grape jelly and three million pounds of jam per month.The Operations VP of the company has indicated that the plant is currently operating both efficiently and at maximum production potential.Answer the following questions regarding the economics of the plant.

a.Using Excel or similar software, graph the production possibility curve of the current operation and its current output of jam and jelly respectively.

b.A new "extrusion" process is being considered for grape jelly production.Although engineers have not been able to pinpoint specific production increases, they are estimating it to be in the ten to 15 percent range.It would not affect the jam production potential as the fruit bits are not extruded for the jams.Using an illustration only (no specific numbers), demonstrate how the new extrusion process would affect the production possibility curve constructed in (a) above.

c.In the interest of locking up business with the nation's largest jam and jelly producer, a major fresh fruit supplier to the company has recently opened a huge 6,000 acre fruit farm close to the jam and jelly processing facility.This event has radically altered the efficiency of the jam and jelly operation's supply chain, enabling access to fresh fruit with lower logistic costs and far few fewer logistic complexities.The net effect has been to lower transportation costs quite dramatically for the fruits used in jams as well as grapes used for jelly.Explain how this would affect the production possibilities of the firm.Demonstrate it with a graph overlay (illustration only, no numbers) to the original graph constructed in (a) above.