Refer to Table 2-7. The Shellfish Shack produces only shrimp and oysters. The table above shows the maximum possible output combinations of the two types of shellfish using all resources and currently available technology
a. Suppose The Shellfish Shack is currently producing at point E. What is the opportunity cost of producing an additional 11,000 pounds of oysters?
b. Suppose The Shellfish Shack is currently producing at point E. What happens to the opportunity cost of producing more and more shrimp? Does it increase, decrease, or remain constant? Explain your answer.
c. Suppose The Shellfish Shack is currently producing at point B. What happens to the opportunity cost of producing more and more oysters? Does it increase, decrease, or remain constant? Explain your answer.
d. Suppose The Shellfish Shack is plagued by a disease which destroys oyster beds but not shrimp habitats. What would happen to its PPF?
a. 10,000 pounds of shrimp
b. It increases. For example to move to D, The Shellfish Shack has to give up 10,000 pounds of oysters to produce an additional 5,000 pounds of shrimp. For each additional 5,000 pounds of shrimp produced, more and more oysters must be given up.
c. It increases. Each time it gives up 5,000 pounds of shrimp, fewer and fewer oysters can be produced.
d. Its PPF would rotate inward, with maximum shrimp production staying the same but maximum oyster production being reduced.
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