Cakes 16- 14- 12- PPF N 15 18 Sandwiches Cakes PPF 1.Diagram 1 above depicts the production possibility frontier (PPF) for a Patsy's Snack Shop. Answer the questions below and show all calculations where appropriate. (40 points) a. Using the information provided, and by referring to points or values on the diagram, explain in one paragraph how Diagram 1 illustrates the problem of scarcity for Patsy's Snack shop. b. Using the information provided in Diagram 1, and by referring to points or values on the diagram, explain how this PPF illustrates production efficiency for Patsy's Snack Shop. c. "Every point on this PPF in Diagram 1 involves a tradeoff." Explain by referring to specific values and points on the diagram. d. In Diagram 1, compare the opportunity cost of increasing the production of cakes from 8 to 12 with the opportunity cost of increasing the production of cakes from 14 to 16 cakes. Show your calculations. Why is the opportunity cost of making an extra cake not the same in the two situations? e. In Diagram 2, how would explain the change in the shape of Patsy's Snack Shop from PPF, to PPF,? 2. The following table shows the amount of good A and good B that two countries could produce if they devoted all of their resources to that good. Assume both countries have the same amount of resources and the trade-off between good A and good B remains constant as resources are shifted from one good to another. (40 points) Canada India Good A 200 300 Good B 400 900 a. Which country has the absolute advantage in good A? In good B? b. What is Canada's marginal opportunity cost of producing good A? good B? c. What is India's marginal opportunity cost of producing good A? good B? d. Which country has the comparative advantage in good A? In good B? 3. Is the following statement true or false? Please explain. (20 points) "Everyone has a comparative advantage