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The Boswell Fruit Farm produces only oranges and papaya. Table 1 below shows the maximum possible output combinations of the two fruits using all resources
- The Boswell Fruit Farm produces only oranges and papaya. Table 1 below shows the maximum possible output combinations of the two fruits using all resources and currently available technology. Answer the questions below and show calculations where appropriate. (25 points)
Table 1
Boswell Fruit Farm | ||
Possible Output Combinations | Oranges | Papayas |
(thousands of kilos) | (thousands of kilos) | |
A | 140 | 0 |
B | 120 | 20 |
C | 100 | 38 |
D | 80 | 52 |
E | 60 | 64 |
F | 40 | 74 |
G | 20 | 80 |
H | 0 | 82 |
a. Suppose the Fruit Farm is currently producing at point F. What is the opportunity cost of producing an additional 10,000 kilos of oranges?
b. Which of the possible output combinations represent the lowest opportunity cost for one thousand kilos of papayas? Show your calculation to support your answer.
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Step: 1
a The opportunity cost of producing an additional 10000 kilos of oranges at point F can be calculated by finding the change in papaya production when ...Get Instant Access to Expert-Tailored Solutions
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Step: 2
Step: 3
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