Question
Assume that Scarlett can produce 6 units of market output or 3 units of nonmarket output in one hour; Rhett can produce 8 units of
Assume that Scarlett can produce 6 units of market output or 3 units of nonmarket output in one hour; Rhett can produce 8 units of market output and 3 units of nonmarket output in one hour. Scarlett and Rhett have 16 hours a day each to decide on.
a). Draw their separate production possibilities frontiers.
b). Now assume, that Scarlett and Rhett have formed a household. On a separate graph, please draw their joint (family) production possibilities frontier.
c). Now assume, that Scarlett and Rhett have inherited a nice condo and decided to start renting it out (this is to say, that they got some non-earned income). The level of this income is equivalent to 50 units of market output. They decided that that level of non-market output is enough for them to stop working. On a separate graph, please draw their new joint (family) production possibilities frontier and plot this household's indifference curve.
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