1. Production Possibilities Curve

Consider a bakery that produces two baked goods, muffins and bread loafs.

Draw your own a production possibilities curve for the two products. The drawing can be either digitally created or an uploaded picture of a hand drawn curve (in either scenario, ensure the information is legible and clear). For this question, you are submitting a graph of the production possibilities curve only with the labels noted below. You do not provide explanations.

1. Label the axis and draw your curve.
2. Label a point (A), to demonstrate a scenario where one muffins is allocated more of the resources. (1 points)
3. Label a second point (B), where bread loafs is more of the resources. (1 points)
4. Shade the area of possible production green. (1 points)
5. Shade the area outside of the limits of production red. (1 points)
6. Suppose a new technology was invented that reduced the waste of the inputs (resources)

Draw the change on the graph. (2 points)

1. Opportunity cost
   1. Determine the opportunity cost of choosing Option A over Option B. (2 points)

Consider the same bakery. With an hour remaining in his shift, the baker has noticed there is a limited amount of flour remaining (10 kg to be exact).

Given the limited time, the baker can use the flour to bake muffins or bread loafs, but not both.

Option A: to bake muffins, requires 1 kg of flour per dozen and generates profit of $2 per dozen.

Option B: to bake bread loafs, requires 1.5 kg of flour per loaf and generates a profit of $2.50 per loaf.

Please bold or highlight your answer.

1. Determine which option you would choose, and explain why. (2 points)

Please bold or highlight your answer.