Answer to Question #86909 in Microeconomics for Buhle

Question

Tom is a full-time lecturer at a private higher education institution and is considering a career in
carpentry. He wishes to pursue a career in carpentry (a childhood dream) which he has studied part-time
and is now equipped to take on clients. In his current position he earns a rate of R1000 per day and if he
were to pursue a career in carpentry he would earn R800 per day. Due to the flexibility of the
employment conditions at the higher education institution he works for, Tom can negotiate the number of
days he works at and will receive a rate of remuneration based on the number of days worked.

1.2 Discuss the underlying assumption of the shape of the above drawn diagram and comment on how
likely this could be true with respect the above scenario.

Answer 1

The production possibility frontier in this case is a line, which will show the potential combinations of working on both positions and the maximal possible amount earned. The PPF is linear and this could be true, if there is no problem in changing the amount of hours worked on different positions.