Lost Horizon produces only two goods: stuffed toy elephants and stuffed toy donkeys. Each worker comes with a fixed quantity of material and capital, and the economy's labour force is fixed at 25 workers.

Table 1.21 indicates the amounts of elephants and donkeys that can be produced daily with various

quantities of labour. a) What is the opportunity cost of increasing the output of elephants from 375 to 525?

b) What is the opportunity cost of increasing the output of donkeys from 750 to 900?

c) Suppose that the planning office dictates an output of 525 elephants and 750 donkeys. Is this output combination possible?

d) Now, assume that new technology is introduced in the production of donkeys so that each worker can

produce 20 more donkeys a day. Can the planning office's dictate of 525 elephants and 750 donkeys now be met?

Daily Daily Production Production Number of of Number of of Workers Elephants Workers Donkeys