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Megan is a talented artist who sells hand-crafted goods on her website. Megan currently crafts and sells both crochet hats and pillows. She spends

  


 


 

Megan is a talented artist who sells hand-crafted goods on her website. Megan currently crafts and sells both crochet hats and pillows. 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) (Pillows) (Crochet hats) (Pillows) A 8 0 0 B 6 2 3 11 C 4 4 2 16 D 2 6 1 19 E 0 00 8 0 20 20 On the following graph, use the blue points (circle symbol) to plot Megan's initial production possibilities frontier (PPF). PILLOWS 30 25 20 15 10 10 5 0 0 1 2 3 4 5 8 m CROCHET HATS 7 8 Initial PPF New PPF (?) Suppose Megan 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 Megan 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 Megan increases her production of crochet hats, her opportunity cost of producing one more crochet hat Suppose Megan 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 pillows. 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, Megan's opportunity cost of producing pillows is it was previously.

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