Answer to Question #148927 in Microeconomics for Hamza Malik

Question

Suppose you are a 2 member group and you have to produce 2 projects one is for Arts (draw something) and the other is for maths (complicated calculation based). You have 1 day to produce. both labor (group member) have 24 hours as available resource. So the total resource available is 48 hours. In that resource one of the member is good in drawing and other member is good in maths. You need to discuss how the Production Possibilties frontier will help in allocating the time available (48 hours) in producing 2 product (project of arts and project of maths)

Hint
case 1 = all resoruces for maths = how much marks you may get from that (in terms of percentage)
case 2 = all resoruces for arts = how much marks you may get form that in terms of percentage)
case 3 = divide the time in terms of specialzation = how much marks you may get in terms of pecentage)
Why PPF is negatively sloped?
Why PPF is bended outward?

Answer 1

A) case 1 - all resource for maths (in terms of percentage)

As 2 projects were to be completed within 48 hours , and if we do only 1 project then 50% we will given to us .

B) case 2 - all resources for arts (in terms of percentage)

As 2 projects were to be completed within 48 hours and if we give 48 hours only to arts then we will score 50% .

C) case 3 - divide in terms of specialization (in terms of percentage)

24 hours for arts

24 hours for maths

48 hours for 1 projects

Then we will score 100 % .

Why PPF is negatively sloped?

PPF curve is concave to the origin because of marginal rate of substitution . This is because in order to consume one quantity of commodity x , we need to sacrifice commodity y as resources are limited and not equally efficient in the production of both the goods .

Why PPF is bended outward?

It is because of ' law of increasing opportunity cost '

Increased opportunity cost of production

Other reasons -

1) all the labours are not equally substitutable

2) so increasing no of labour cause marginal product to fall

3) if economy produce more then one product , then labour will have choice to choose between the product in which interested or comfortable