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Lucia is a talented artist who sells hand-crafted goods on her website. Lucia currently crafts and sells both crochet hats and embroidered sweaters. She spends
Lucia is a talented artist who sells hand-crafted goods on her website. Lucia currently crafts and sells both crochet hats and embroidered sweaters. She spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of her time is spent on each good. Hours Crafting Produced Choice (Crochet hats) (Embroidered sweaters) (Crochet hats) (Embroidered sweaters) A 8 0 4 0 B 6 11 N W 4 4 16 2 6 19 O 8 20On the following graph, use the blue points (circle symbol) to plot Lucia's initial production possibilities frontier (PPF). 30 25 Initial PPF 20 New PPF 15 EMBROIDERED SWEATERS 10 5 0 2 3 5 6 7 8 CROCHET HATSSuppose Lucia is currently using combination D, producing one crochet hat per day. Her opportunity cost of producing a second crochet hat per day is per day. Now, suppose Lucia is currently using combination C, producing two crochet hats per day. Her opportunity cost of producing a third crochet hat per day is per day. From the previous analysis, you can determine that as Lucia increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Lucia buys a new tool that enables her to produce twice as many crochet hats per hour as before, but it doesn't affect her ability to produce embroidered sweaters. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more crochet hats per hour, Lucia's opportunity cost of producing embroidered sweaters is it was previously
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