2.The McStevens Fruit Farm produces only oranges and papaya. Table 1 below shows the maximum possible output combinations of the two fruits using all resources and currently available technology. Answer the questions below and show calculations where appropriate.

(35 points)

Table 1

McStevens Fruit Farm

Possible Output Combinations

Oranges

Papayas

(thousands of kilos)

(thousands of kilos)

A

140

0

B

120

20

C

100

38

D

80

52

E

60

64

F

40

74

G

20

80

H

0

82

a.Graph the Fruit Farm's production possibilities frontier. Put oranges on the horizontal axis and papayas on the vertical axis. Be sure to identify the output combination points on your diagram. (15pt)

b.Suppose the Fruit Farm is currently producing at point C. What is the opportunity cost of producing an additional 14,000 kilos of papayas? (10pt)

c.Suppose the Fruit Farm is plagued by a maggot infestation which destroys orange trees but not papayas. Explain with a graph what happens to the PPF. (10pt)