Question
An economy has a labour force of three workers. All are equally adept at growing apples and so each is capable of producing two apples
An economy has a labour force of three workers. All are equally adept at growing apples and so each is capable of producing two apples per year. However, their ability to produce oranges is unequal. Kevaughn is the most productive and can produce 3 oranges per year; Kevin at his best can make only two per year; and Kemarr can manage only one. Assume that in the division of workers between the two activities, more productive workers will be assigned to orange production ahead of less productive ones. Draw the axes for a PPF and first plot all the production possibilities. Now connect the dots to construct the PPF. How is it different from the PPFs that you have constructed before? What is the opportunity cost of the first two apple? The third apple? What do you notice?
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