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Consider an economy that produces only food and clothing. Its production possibilities boundary is shown at right. a. If the economy is at point A.

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Consider an economy that produces only food and clothing. Its production possibilities boundary is shown at right. a. If the economy is at point A. how many tonnes of clothing and how many tonnes of food are being produced? At point C? PointA 3 tonnes of clothing and 3 tonnes of food' Point 0 6 tonnes of clothing and 3 tonnes of food' b. What do we know about the use of resources when the economy is at point A? ' When the economy is at point A the use of resources is inefcient c. If the economy is at point C, what is the opportunity cost of producing one more tonne of food? a The opportunity cost of producing one more tonne of food is about 0.4 tonne of clothing . d. What do we know about the use of resources at point D? When the economy is at point D the use of resources is |:|. Tonnes of Food Per Year Production Possibilities Boundary 1 2 3 4 5 6 Tonnes of Clothing Per Year

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