Figure 2.2 Figure 2.2 above shows the production possibilities frontier for Atikamekw Cree (ca.1600)with a historical tradition of fishing and farming.Assume they produce two goods: fish and grains.
Alt text for Figure 2.2: In figure 2.2, a graph compares production of grains and fish.
Long description for Figure 2.2: The x-axis is labelled, grains in kilograms, and the y-axis is labelled, fish in kilograms.The x-axis is marked from 0 to 180, in increments of 20.The y-axis is marked from 0 to 140, in increments of 20.A line slopes down from the point 0, 120 to the point 160, 0.
-Refer to Figure 2.2.What is the opportunity cost of one kilogram of Fish?

Question

Figure 2.2  Figure 2.2 above shows the production possibilities frontier for Atikamekw Cree (ca.1600)with a historical tradition of fishing and farming.Assume they produce two goods: fish and grains.
Alt text for Figure 2.2: In figure 2.2, a graph compares production of grains and fish.
Long description for Figure 2.2: The x-axis is labelled, grains in kilograms, and the y-axis is labelled, fish in kilograms.The x-axis is marked from 0 to 180, in increments of 20.The y-axis is marked from 0 to 140, in increments of 20.A line slopes down from the point 0, 120 to the point 160, 0.
-Refer to Figure 2.2.What is the opportunity cost of one kilogram of Fish?

Quizplus · Accepted Answer

The opportunity cost of one kilogram of fish is the amount of grains that need to be given up to produce one kilogram of fish. From the production possibilities frontier in Figure 2.2, we can see that if the Atikamekw Cree produce only fish, they can produce 120 kilograms of fish. However, if they produce no fish, they can produce 160 kilograms of grains. Therefore, the opportunity cost of one kilogram of fish is 160/120 = 1.33 kilograms of grains. To maximize their total output, the Atikamekw Cree should produce at the point where the production possibilities frontier is tangent to their indifference curve, which is at the point where the slope of the production possibilities frontier is equal to the slope of the indifference curve. This occurs at the point where they produce 50 kilograms of fish and 80 kilograms of grains.

Figure 22 Figure 2