Suppose that a hypothetical economy which only produces food and clothing has the following production possibility schedule (table):

Point

Units of Food (millions)

Units of Clothing(thousands)

A

0

8.0

B

1

7.5

C

2

6.5

D

3

5.0

E

4

3.0

F

5

0.0

(a)Graph the production possibility curve (PPC) with clothing on the vertical axis and food on the horizontal axis.Label the production points A through F.(2 marks)

(b)What would be the opportunity cost of increasing production of food by 1 million if the economy was originally at Point Aand moving to point B)?(1 mark)

(c)Suppose the economy is currently producing at Point D.What would be the opportunity cost associated with increasing production of food by 1 million units and moving to point E)? (1 mark)

(d)Why are food costs increasing?That is, why is the opportunity cost of moving from D to E greater than the opportunity cost of moving from A to B? (3 marks)

(e)On the same graph, label point U at the production of 3 thousand units of clothing and 3 million units of food.In addition, label point H at the production of 6 thousand units of clothing and 3.5 million units of food.What do points U and H indicate?(1 mark)

(f)What is the difference between unemployed and inefficient use of economic resources? (2 marks)