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Assume that an economy can produce either 300 tonnes of coffee and no rubber or 100 tonnes of rubber and no coffee. You may further
Assume that an economy can produce either 300 tonnes of coffee and no rubber or 100
tonnes of rubber and no coffee. You may further assume that this 3:1 coffee/rubber ratio is
constant. Draw a production possibilities curve for this economy with coffee on the
vertical axis. Next, indicate with the letters a and b an increase in rubber production.
Finally illustrate with a triangle the cost of this additional rubber.
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