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E) The marginal cost of the eighth envelope is $5. A) (10 points) Draw a graph of the production-possibilities frontier for Stromboli.
E) The marginal cost of the eighth envelope is $5. A) (10 points) Draw a graph of the production-possibilities frontier for Stromboli. B) (5 points) Consider production of 45 million pizzas and 8,000 pizza ovens. Would you consider this production to be efficient, inefficient, or impossible? Explain your reasoning. C) (5 points) Consider two cases for 2004: (i) production of 60 million pizzas and 6,000 pizza ovens, versus (ii) production of 15 million pizzas and 18,000 pizza ovens. Which case would lead to a more generous production possibilities frontier for Stromboli in 2005?
