A manufacturer can produce two types of electronic devices in its factory: smartwatches and tablets. The production possibility boundary below shows the different quantities of the two goods that can be produced in a single week.
| Point | Smartwatches (thousands) | Tablets (thousands) |
|---|---|---|
| Intercept | 120 | 0 |
| P | 100 | 40 |
| Q | 70 | 90 |
| R | 30 | 130 |
| Intercept | 0 | 150 |
It can be deduced from the diagram that
a movement from P to Q results in an improvement in productive efficiency because the total output of electronic devices increases from 140,000 to 160,000 units.
at point Q, the opportunity cost of producing 30,000 more smartwatches is 50,000 tablets.
a movement from point Q to point R does not involve an opportunity cost because all resources are fully employed.
the maximum weekly production of the factory is 120,000 smartwatches and 150,000 tablets.
