Answer to Question #286112 in Microeconomics for Saraswathi

Question

Suppose a sample society has a economy with one resource labour. Labour can be used to produce only 2 commodities X a necessity good (food) and Y a luxury good (music & merriment). Suppose the labour force consists of 100 workers.. 1 labourer can produce either 5 units of necessity per month by (hunting and gathering)

Answer 1

100=5x+10y

The points of intersection are when all the labor is spent on either non-entertainment, or on goods of necessity

The point on the budget line is that labor is distributed among goods

A point beyond the budget line is a set of goods unattainable by available resources

The company can decide by voting which set of goods it needs

Under the dictatorship, there is a strict restriction on resources, so it's time for business, and an hour for fun. Therefore, the main consumption of resources for necessary goods, and then for entertainment.

With free there will be competition and society will choose its own set of benefits, but society needs to be slightly controlled and regulated in order to prevent under-production and overproduction.