The following chart illustrates the production possibilities for an economy that produces only two goods--Tennis rackets and tennis balls:

Allocation.......................Tennis Rackets................................Tennis Balls

A..............................................60.....................................................0

B..............................................56...............................................1000

C..............................................48...............................................2000

D..............................................32..............................................3000

E................................................0...............................................4000

Use the table to answer the following questions:

(a) Draw a diagram of the production possibilities frontier (PPF) for the economy shown above....(2 marks)

(b) Suppose that this economy is currently producing 2000 tennis balls and 40 rackets per week. What is the significance of this allocation? Why might the economy end up there? (3 marks)

(c) What is the opportunity cost of producing the first thousand tennis balls? (1 mark)

(d) What is the opportunity cost of increasing the output of tennis rackets from 48 to 56 per week? Please sho)w a calculation. (2 marks)

(e) What are two factors that can create economic growth in this model? Show on your diagram in part (a) how the PPF is affected. (2 marks)

(f) Explain how the PPF model illustrates the economic concepts of scarcity, choice and opportunity cost. (5 marks)

For the toolbar, press ALT+F10 (PC) or ALT+FN+F10 (Mac).