Quiz 1
Economics 121 A/B
Fall 1996

Name:_____________________________________

A small country produces food and textiles according to the productions possibilities frontier (PPF) shown in the graph.

Current production is 3,000 tons/year of food and 5,000,000 yards/year of fabric (3,000 & 5,000 on the graph).

1. (5 points) Estimate the current opportunity cost of food in terms of textiles from the graph.

2. (5 points) All other countries have an opportunity cost of food of ½ textiles. Should this country:

(a) produce more food to trade for textiles, or

(b) produce more textiles to trade for food?

Explain briefly.

3. (5 points) On the graph, show the effect on the PPF of improved technology in the textile industry.

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