Production Possibility & Good X & Good Y & }(l) Opportunity Cost o Good X A & 0 & 100 & B & 2 & 90 & C & 4 & 60 & D & 6 & 20 & a) Calculate the opportunity cost of the production of good mathrm(X) at each point. What law does the trend in those values exhibit? b) What changes are required for this economy to shift the PPF outward?

## Step 1: Understanding Opportunity Cost<br />### The opportunity cost of producing more of Good X is the amount of Good Y that must be given up. This can be calculated by observing the change in the quantity of Good Y as we move from one production possibility to another while increasing the production of Good X.<br /><br />## Step 2: Calculating Opportunity Cost for Each Transition<br />### We calculate the opportunity cost between each pair of consecutive points:<br />- **From A to B**: <br /> - Increase in Good X = \(2 - 0 = 2\) units<br /> - Decrease in Good Y = \(100 - 90 = 10\) units<br /> - Opportunity Cost per unit of Good X = \(\frac{10}{2} = 5\) units of Good Y<br /><br />- **From B to C**: <br /> - Increase in Good X = \(4 - 2 = 2\) units<br /> - Decrease in Good Y = \(90 - 60 = 30\) units<br /> - Opportunity Cost per unit of Good X = \(\frac{30}{2} = 15\) units of Good Y<br /><br />- **From C to D**: <br /> - Increase in Good X = \(6 - 4 = 2\) units<br /> - Decrease in Good Y = \(60 - 20 = 40\) units<br /> - Opportunity Cost per unit of Good X = \(\frac{40}{2} = 20\) units of Good Y<br /><br />## Step 3: Identifying the Economic Law<br />### The trend in opportunity costs shows an increasing pattern, which illustrates the law of increasing opportunity costs. As more of Good X is produced, the economy has to give up increasingly larger amounts of Good Y.<br /><br />## Step 4: Shifting the Production Possibility Frontier (PPF) Outward<br />### To shift the PPF outward, the economy needs to increase its resources or improve technology. This could involve:<br />- Increasing the availability of resources such as labor, capital, or raw materials.<br />- Advancements in technology that make production more efficient.<br />- Improvements in education and training that enhance labor productivity.