Answer to Question #261188 in Economics of Enterprise for Asembi

Question

There are 5 workers in an economy. Each worker can make either 4 tins of milk or 3 shirts. Output per worker is independent of the no. of other workers in the same industry

Answer 1

There are 5 workers in an economy. Each worker can make either 4 tins of milk or 3 shirts. Output per worker is independent of the no. of other workers in the same industry

a. How many tins of milk could society produce if it was willing to do without shirt.

b. Why are point outside the PPF not attainable

a. One worker could make tins of milk = 4

5 workers could make tins of milk = 4*5 = 20 tins of milk

So if society only makes tins of milk then it could make 20 tins of milk.

b. PPF shows the maximum amount of goods that could be produced with given resources when all resources are fully utilised. So economy could not produce more than this amount or could not produce beyond PPF so points outside the PPF are unattainable.