Short free-response question

Tractors or wheat

Unit 1
5 points
About 12 minutes

You can use a calculator on this question, just like on exam day.

A shorter question on one or two models, often with data in a table. You might calculate something like an unemployment rate, real GDP or the spending change needed to close a gap, draw a labeled graph (described in words on this site), and explain an effect. On the exam: Questions 2 and 3 of 3 in Section II; each is worth a quarter of the section score, with about 12 minutes suggested for each. A four-function calculator is allowed.

The question and its sources

The country of Harrowfield uses all of its resources and the best available technology to produce only tractors and wheat. The table shows five combinations on Harrowfield's production possibilities curve (PPC).

Table 1. Production possibilities for Harrowfield

Combination	Tractors	Wheat (tons)
A	0	100
B	10	90
C	20	75
D	30	50
E	40	0

Source: Hypothetical data

Suggested time: 12 minutes

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Part (a)

1 point

Calculate the opportunity cost of producing one more tractor when Harrowfield moves from combination B to combination C. Show your work.

Your answer to part (a)

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Part (b)

1 point

Does Harrowfield's PPC show constant opportunity cost or increasing opportunity cost? Explain using data from the table.

Your answer to part (b)

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Part (c)

1 point

Harrowfield is currently producing 20 tractors and 60 tons of wheat. Is this an efficient use of its resources? Explain.

Your answer to part (c)

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Part (d)

1 point

A new engine design increases productivity in tractor production but has no effect on wheat production. Describe how Harrowfield's PPC changes. Identify what happens to the point where the PPC meets the wheat axis.

Your answer to part (d)

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Part (e)

1 point

Identify the factor of production that tractors represent when they are used to grow wheat.

Your answer to part (e)

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