Reference no: EM13243400
The population of an isolated island consists of 10 people. In oneyear, each person can either pick 100 bunches of bananas or,alternatively, tend an oven that bakes bananas into banana bread.There is only one oven on the island. It has the capacity toproduct 100 loaves of banana bread per year. This one oven on theisland can either be fully utilized (producing 100 loaves of bananabread per year) or not used at all. One person is needed to tendthe oven. To produce 100 loaves of banana bread, the oven requires100 bunches of bananas.
a)Graph the production possibilities frontier PPF1 (bunches ofbananas versus loaves of banana bread) for the island. Put bananabread on the horizontal axis.
b)what is the opportunity cost of producing 100 loaves of bananabread?
c)Depict the possible consequence of the following:
i.The natives of the island discover a second oven that has the samecapacity as the first oven. Now what does the PPF for the islandlook like? Depict the new ppf on the same graph and label itPPF2.
ii.A new technology is discovered that allows 100 loaves of bananabread to be baked with only 50 bunches of bananas in each of thetwo ovens - PPF3.
iii.A severe hurricane strikes the island, destroying all the bananatrees - PPF4.
iv.A magician migrates to the island with the capacity to convert each bunch of bananas into a loaf of banana bread - PPF5.
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