Answer to Question #261131 in Macroeconomics for BILLIONS

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 number of workers in the same industry.

a)Draw up a society PPF.

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

c)Indicate a point in the diagram that is inefficient production.

d)Why are point outside the PPF not attainable

Answer 1

a) Society PPF.

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

They will produce 5$\times$ 4 tins of milk

=20 tins of milk.

c)Indicate a point in the diagram that is inefficient production.

The point A on the diagram is a point of insufficient production since they are not utilizing resources to the fullest.

d)Why are points outside the PPF not attainable

Points that lie outside the production PPF (Point B) unattainable because the quantities cannot be produced using currently available resources and technology.