(Solved): The following graph shows the production possibilities curve (PPC) of an economy that produces food ...

The following graph shows the production possibilities curve (PPC) of an economy that produces food and coal. The black points (plus symbols) represent three possible output levels in a given month. You can click on the points to see their exact coordinates. 16 14 12 10 FOOD (Millions of pounds) + an 2 0 0 PPC 40 80 +3 120 160 200 240 COAL (Thousands of tons) 280 320 2 0 0 40 80 120 160 200 240 280 320 COAL (Thousands of tons) Suppose the economy initially produces 6 million pounds of food and 200,000 tons of coal, which is represented by point A. The opportunity cost of producing an additional 2 million pounds of food (that is, moving production to point B) is tons of coal. Suppose, instead, that the economy currently produces 168,000 tons of coal and 8 million pounds of food, which is represented by point B. Now the opportunity cost of producing an additional 2 million pounds of food (that is, moving to point C) is tons of coal. Comparing your answers in the two previous paragraphs, you can see that the opportunity cost of 2 million additional pounds of food at point B the opportunity cost of 2 million additional pounds of food at point A. This reflects is the