Suppose Eleanor is currently using combination D, producing one knit cap per day. Her opportunity cost of producing a second knit cap per day is
per day.
Now, suppose Eleanor is currently using combination C, producing two knit caps per day. Her opportunity cost of producing a third knit cap per day is
per day.
From the previous analysis, you can determine that as Eleanor increases her production of knit caps, her opportunity cost of producing one more knit
cap
Suppose Eleanor buys a new tool that enables her to produce twice as many knit caps per hour as before, but it doesn't affect her ability to produce
embroidered sweaters. Use the green points (triangle symbol) to plot her new PPF on the previous graph.
Because she can now make more knit caps per hour, Eleanor's opportunity cost of producing embroidered sweaters is
previously.
it was
