Answer to Question #88952 in Microeconomics for mahlatse mamabolo

Question

tom is a full time leacture at 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 this current position he earns a rate of R 1000 per day and if he were to pursue a career in carpentry he would earn R 800 per day . due to the flexibility of the employement 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.

construct a prodctuin possibility frontie to illustrate TOM's earning potential between the two career if initially he was not working as a carpenter, then he worked one week per month, then two, then three and finally four weeks per month

Answer 1

A production possibility frontier is a line that illustrates Tom’s earnings potential between the two careers. Initially he was not working as a carpenter at point (0; 20,000), then he worked one week per month at point (4,000; 15,000), then two, then three and finally four weeks per month at points (8,000; 10,000), (12,000; 5,000), and (16,000; 0) respectively (assuming five working days in a week and four weeks in a month).