(Solved): 5. Opportunity cost and production possibilities Jake is a talented artist who sells ha ...

5. Opportunity cost and production possibilities Jake is a talented artist who sells hand-crafted goods on his website. Jake currently crafts and sells both tea towels and embroidered sweaters. He spends 8 hours a day working on crafts. The following table gives different daily output scenarios depending on how much of his time is spent on each good. On the following graph, use the blue points (circle symbol) to plot Jake's initial production possibilities frontier (PPF). On the following graph, use the blue points (circle symbol) to plot Jake's initial production possibilities frontier (RPF) Suppose Jake is currently using combination $$D$$, producing one tea towel per day. His opportunity cost of producing a second tea towel per day is per day. Now, suppose Jake is currently using combination C, producing two tea towels per day. His opportunity cost of praducing a third tea towel per day is per day. From the previous analysis, you can determine that as Jake increases his production of tea towels, his opportunity cost of producing one more tea towel Suppose Jake buys a new tool that enables him to produce twice as many tea towels per hour as before, but it doesh't affect his ability to produce embroidered sweaters. Use the green points (triangle symbol) to plot his new ppF on the previous graph. Because he can now make more tea towels per hour, Jake's opportunity cost of producing embroidered sweaters is previously.