Assume that an economy can chose between producing food and producing shelter, diagram a production possibilities curve reflecting diminishing returns (increasing opportunity costs).

Graph a correctly labeled production possibilities curve for the economy. On your graph:

• Use the letter E to label one of the points that is efficient in production.
• Use the letter U to label one of the points at which there might be unemployment.
• Use the letter I to label one of the points that is not feasible.
• Explain in this context the diminishing returns part of the picture.