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1. Explain why the enrollment in colleges and universities increases at times of economic recession. Make a distinction between explicit and implicit costs in your explanation
2. Use the following production possibilities table to draw the corresponding production possibilities curve (PPC) for a given economy.
Options
Food
Clothing
A
0
28
B
1
26
C
2
22
D
3
16
E
4
9
F
5
a) Find the opportunity cost of producing each unit of food in terms of clothing. Explain its pattern.
b) Assume we are currently producing 6 units of clothing and 4 units of food. Plot this point and interpret it economically.
c) What is the optimum production of output when food sells for $12 a unit and clothing for $3. Explain why you choose this point.
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