Question I: The table below shows the production possibilities for the Miranda economy, an economy based

solely on Hamburger and Motorcycles. Assume the opportunity cost of producing Hamburger and Motorcycles

is constant.

Note: graphs must be done by hand; not on the computer. You are not allowed to use a graphing calculator on

the AP exam, so now is as good a time as any to start sharpening your graphing skills. Please use a pencil.

Colored pencils are fine. Each graph should take up at least ½ page and be visually legible.

Quantity of

Hamburger

0

25

50

Quantity of

Motorcycles

100

50

0

a. Draw a correctly labeled graph of the production possibility curve (labeled PPC1), putting the quantity of

Motorcycles on the vertical axis.

b. What is the opportunity cost of one unit of Hamburger?

c. Suppose that technology improves in Hamburger production and allows for 100 units of Hamburger to be

produced when all resources are devoted to Hamburger production. Add a new production possibility curve that

reflects this new technology to the graph from part (a) and label the new production possibilities curve PPC2./nd. After the technological improvement in Hamburger production in part (c), has the opportunity cost of

Motorcycles increased, decreased, or remained the same? Explain.