(Solved): 5. Opportunity cost and production possibilities Tim is a talented artist who sells hand-crafted g ...

5. Opportunity cost and production possibilities Tim is a talented artist who sells hand-crafted goods on his website. Tim currently crafts and sells both crochet hats and cutting boards. 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 Tim's initial production possibilities frontier (PPF). Initial PPF $$?$$ New PPF Suppose Tim is currently using combination D, producing one crochet hat per day. His opportunity cost of producing a second crochet hat per day is per day. Now, suppose Tim is currently using combination C, producing two crochet hats per day. His opportunity cost of producing a third crochet hat per day is per day. From the previous analysis, you can determine that as Tim increases his production of crochet hats, his opportunity cost of producing one more crochet hat Suppose Tim buys a new tool that enables him to produce twice as many crochet hats per hour as before, but it doesn't affect his ability to produce cutting boards. Use the green points (triangle symbol) to plot his new PPF on the previous graph. Because he can now make more crochet hats per hour, Tim's opportunity cost of producing cutting boards is it was previously.