Question

The following table provides information about the production possibilities frontier of Athletic Country. Use it to answer the questions that follow:

Bats (000)	Rackets (000)
0	420
100	400
200	360
300	300
400	200
500	0

1. If Athletic Country currently produces 100 bats and 400 rackets, what is the opportunity cost of an additional 100 bats?       

2. Is the production of 200 bats and 200 rackets efficient? Explain.                      

Answer 1

1. When production of bats is increased from 100 to 200 bats (100 additional) , production of rackets decrease from 400 to 360 rackets,

so opportunity cost of 100 additional bats = 400 - 360 = 40 rackets

2. Production of 200 bats and 200 rackets is not efficient.

From the table, we can see that the country can produce 200 bats and 360 rackets, so when only 200 rackets are produced, country is not utilizing its resources fully.. Therefore production of 200 bats and 200 rackets is inefficient.