Production Possibilities Curve AssignmentDetermining Production Possibilities

You are getting ready to openThe Shoe Hut, but you need to determine whether you have the absolute or comparative advantage in the production of specific items. This will help you decide which product is best for specialization.

Your production possibilities are as follows:

• You have the resources to produce up to15 running shoe inserts.
• You have the resources to produce up to10 hiking boot inserts.
• For every2 hiking boot insertsproduced, you give up the production of3 running shoe inserts.

Task 1: Production Possibilities Schedule

Using the information provided, complete your production possibilities schedule:

Task 2: Production Possibilities Curve

Use the information from your production possibilities schedule to create your production possibilities curve. Plot the combinations of running shoe inserts and hiking boot inserts on a graph.

Remember to consider:

• Your opportunity costs.
• Your best options for production.

Task 2: Specialization Decision

Based on your opportunity cost analysis, determine which product you should specialize in. Explain your reasoning.