5. Opportunity cost and production possibilities Valerie is a skilled toy maker who is able to produce both trucks and drums. She has 8 hours a day to produce toys. The following table shows the daily output resulting from various possible combinations of her time. Choice Hours Producing Produced (Trucks) (Drums) (Trucks) (Drums) 0 A 8 4 0 B 6 2 3 8 с 4 4 2 14 D 2 6 1 16 E 0 8 0 17 On the following graph, use the blue points (circle symbol) to plot Valerie's initial production possibilities frontier (PPF). ? 30 25 Initial PPF 20 New PPF DRUMS 15 10 5 0 0 1 2 3 5 6 7 8 4 TRUCKS Suppose Valerie is currently using combination D, producing one truck per day. Her opportunity cost of producing a second truck per day is per day. Now, suppose Valerie is currently using combination C, producing two trucks per day. Her opportunity cost of producing a third truck per day is per day. From the previous analysis, you can determine that as Valerie increases her production of trucks, her opportunity cost of producing one more truck Suppose Valerie buys a new tool that enables her to produce twice as many trucks per hour as before, but it doesn't affect her ability to produce drums. Use the green points (triangle symbol) to plot her new PPF on the previous graph. Because she can now make more trucks per hour, Valerie's opportunity cost of producing drums is it was previously.