Question
Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. Suppose that Brazil's production possibilities for
Brazil produces ethanol from sugar, and the land used to grow sugar can be used to grow food crops. Suppose that Brazil's production possibilities for ethanol and food crops are as follows O.C of producing extra unit = Q you must give up / Q you will geta. Complete the table for the calculation of the Opportunity cost of producing Food crops and the Ethanol. b. Draw a graph of Brazil's PPF. c. If Brazil produces 40 barrels of ethanol a day, how much food must it produce to achieve the production efficiency? d. If Brazil increases its production of ethanol from 40 barrels per day to 54 barrels per day, what is the opportunity cost of the additional ethanol? e. If Brazil increases its production of food crops from 2 tons per day to 3 tons per day, what is the opportunity cost of the additional food?
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