Answer to Question #87627 in Microeconomics for Pooben

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 $1000 per day and if he were to pursue a career in carpentry he would earn $800 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. 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 PPF curve in the drawn diagram is a line, this could be true if Tom can choose between two positions without any additional costs or losses incurred due to the flexibility of the employment with respect the above scenario.