Question
8. Consider a firm that produces two goods: Tractors & Toasters. There are two types of workers at this rm: a manufacturer and an electrician.
8. Consider a firm that produces two goods: Tractors & Toasters. There are two types of workers at this rm: a manufacturer and an electrician. Manufacturers excel at the production of tractors (are better at producing tractors than electricians). However, the two types of workers are equally good at producing toasters. Assume that all other factors of production are also equally good at producing either tractors or toasters.
(a) Graph the production possibilities frontier for this firm. Explain the shape of this PPF. Be specific!
(b) On this graph, demonstrate a production possibility that is efficient/feasible, another that is ineffcient/feasible, and one that is infeasible. Explain.
(c) What is one way that the PPF can expand over time? Give an example of a factor that causes the PPF
to expand and demonstrate the impact on a graph.
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