Question

Tom is a full time lecturer and is considering a career in carpentry. In his current position he earns R 1000 per day and if he pursues a career in carpentry he would earn R 800 per day. due to flexibility of the employment conditions at the institution he works for, Tom can negotiate the number of days he worked at and will receive a rate of remuneration based on the days works. Construct a production possibility frontier to illustrate Tom's potential between the two careers if initially he was not working as a carpenter, then he worked one week per month, then two weeks, then three weeks and then four weeks per month, assuming only four weeks in the month.

Answer 1

The production possibility frontier in this case is a bowed-out curve, which will show the potential combinations of working on both positions and the maximal possible amount earned. If y-axis is working as lecturer and x-axis is working as carpenter, then this curve will start at the point (0; R20000) and will end at the point (R16000; 0), if there is 20 working days per month (5 per week).