Hightechland produces two commodities: movies and computers. Highlands resources include workers, factories, electricity, and so on. The following schedule indicates some of the points on Highlands production curve.

1. Does movie production exhibit increasing, decreasing or constant per-unit opportunity cost ? How do you know ?
2. Graph Hightechland’s production possibility curve, and label it AA.
3. Suppose Highland is operating at point C but would like to alter production to point D. What would be the per-unit opportunity cost of producing more computers ?
4. Suppose Highland is operating at point C but would like to alter production to point B. What would be the per-unit opportunity cost of producing more movies ?
5. What will happen to Highlandtechs production possibilities curve if many of its movie sets are destroyed by fire ? (Assume that the sets are not used in the production of computers.) Using the same graph you drew for question B, draw Highlands new production possibility curve and label it BB.
6. What will happen to Highlandtechs production possibilities curve if all the countrys resources are reduced (perhaps by natural disaster or war ?) Using the same graphas in question B, draw Highlands new production possibilities curve and label it CC.
7. What will happen to Highlandtechs production possibilities curve if technology improves both the production of movies and production of computers ? Using the same graph in question B, draw Hightechlands new production possibilities curve and label it DD.

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