Use the PPC for Macro Island above to answer the following questions. This question has multiple parts. Make sure that you have answered all parts to maximize your points earned. Explain in one to two sentences what the PPC is illustrating for Macro Island. Answers must include specific information from the graph. (2 points) Explain what a move from point B to point A would mean in terms of opportunity cost and production. Answers must include specific information and quantities from the graph. (3 points) Explain the difference between what points C and D represent on the PPC for Macro Island. Answers must include specific information from the graph. (2 points)
The PPC for Macro Island illustrates the different combinations of two goods, food and clothing, that can be produced with the given resources and technology on the island. The graph shows the tradeoff between producing these goods, as represented by the negatively sloped curve. (2 points)
A move from point B to point A would mean that Macro Island is producing more food and less clothing. The opportunity cost of producing one more unit of food is giving up 3 units of clothing. It implies a shift of resources from clothing production to food production. (3 points)
Points C and D on the PPC represent different levels of inefficiency or underutilization of resources. Point C shows that the island is producing below its maximum potential, while point D shows that the island is using all available resources but not efficiently allocating them. (2 points)