4. Opportunity cost and production possibilities Eileen is a skilled toy maker who is able to produce both trains and puzzles. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time. Hours Producing Produced Choice (Trains) (Puzzles) (Trains) (Puzzles) A 8 0 4 O B 6 2 3 11 C 4 4 2 16 D 2 6 1 19 E O 8 0 20 On the following graph, use the blue points (circle symbol) to plot Eileen's initial production possibilities frontier (PPF). 30 O 25 Initial PPF A 20 New PPF 15 PUZZLES 10 5 0 1 2 3 4 5 6 7 8 TRAINSSuppose Eileen is currently using combination D, producing one train per day. Her opportunity cost of producing a second train per day is 7 per day. Now, suppose Eileen is currently using combination C, producing two trains per day. Her opportunity cost of producing a third train per day is V per day. From the previous analysis, you can determine that as Eileen increases her production of trains, her opportunity cost of producing one more train V . Suppose Eileen buys a new tool that enables her to produce twice as many trains per hour as before, but it doesn't affect her ability to produce puzzles. Use the green points { triangle symbol) to plot her new PPF on the previous graph. Because she can now make more trains per hour, Eileen's opportunity cost of producing puzzles is v it was previously