Temple University
Department of Economics

Production Possibilities Frontier Answer Key

A. When the country produces 2 hams they can produce 30 eggs.   When they produce 3 hams they can produce only 22 eggs.  Therefore the country must give up 8 eggs in order to produce one more ham.

B. When the country is producing 30 eggs they can produce 2 hams. When they produce 36 eggs they can produce only 1 ham.  Over the interval from 30 to 36 eggs, a change of 6 eggs, there is a change in ham production of 1 unit. Therefore the opportunity cost of increasing egg production by 1 is 1/6 of a ham.

C. True, the country can produce any combination on or inside the frontier.

D. Add a new column to the table that corresponds to egg production under the new technology.  The entries in the column would be 60, 54, 45, 33, 18 and 0.  Therefore, the answer is 45.

E. Just read the new table to find that egg production is 33.

F. Use your two previous answers to find that the opportunity cost of increasing ham production from 2 to 3 under the new technology is 12 eggs.