Question

1.1 Construct a production possibility frontier to illustrate Tom’s earnings pot ential between the two careers 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 (assuming only four weeks in a month).

Answer 1

In this situation the PPF is a straight line, which begins at the point (0; 16,000) and ends at the point (20,000; 0) if we assume 5 working days in a week (20 days in total). PPF on the diagram below shows possible optimal combinations of work either in carpentry or as a lecturer.