S.
Klepper, Economics
73-100, Fall 2011
If
each unit of food requires one unit of labor and the country has 400 units of
labor, then the maximum number of units of food it can produce is 400. In contrast, if the first unit of clothing
requires one unit of labor but subsequent units of clothing require more than
one unit of labor, then the maximum number of units of clothing the country can
produce is less than 400.
Regarding
opportunity cost, each successive unit of clothing requires a greater and
greater number of units of labor to produce it.
The labor must be transferred from food production. Since each unit of labor produces one unit of
food no matter how many units of food are produced, the number of units of food
sacrificed as each successive unit of clothing is produced rises. Therefore, the opportunity cost of each
successive unit of clothing rises as more units of clothing are produced. The same is also true for food. To see this, note that the production of each
unit of food requires one unit of labor.
Therefore, to produce each additional unit of food, one unit of labor
must be transferred from clothing production.
As more units of labor are transferred from clothing production and less
units of clothing are produced, the amount of clothing sacrificed from the
transfer of each unit of labor increases because less units of labor are
required to produce each unit of clothing as less clothing is produced. Therefore, as more units of food are
produced, the amount of clothing sacrificed to produce each successive unit of
food rises. Consequently, the
opportunity cost of each unit of food increases as more units of food are
produced. With opportunity cost
increasing for both food and clothing, the production possibilities curve of
the country must be concave shaped.
Based
on this description, the answers to the individual questions are:
_____1.
True
_____2. False
_____3.
False—it rises as more units of food are produced.
_____4. True
_____5. True