Given the following chart answer the questions below, assuming that all resources and technology are fixed for this farm.
Corn(bu) Soybeans(bu)
20,000 0
16,000 5000
12,000 9000
8,000 12,000
4,000 14,000
0 15,000
A) Draw the production possibilities frontier. PLACE CORN ON THE Y AXIS
C) Is this farm able to produce 8,000 bushels of corn and 13,000 bushels of soybeans? What does this combination of output suggest about the use of resources?
D) What happens to the opportunity cost of corn production as the farm produces more corn?
E) What happens to the opportunity cost of soybeans production as the farm produces more soybeans?
F) What is the opportunity cost of expanding soybean production from 12,000 to 14,000
bushels?
G) What would be the opportunity cost of producingan additional2,000 bushels of soybeans if thisfarm were currently producing 8,000 bushels of corn and 10,000 bushels of soybeans? Explain your answer.
H) Suppose Monsanto (a chemical and biological engineering firm) develops a new strain of soybeans that is more disease resistant, heat and drought tolerable such that it increases yields by 15%, what happens to the PPC?