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5021 econ 2010-200 test 1 (take-home) Marc Santugini 3. PPF and CPF for 3 points. Kayla can produce food and luxury goods. Kayla has 5 hours of work, Each hour of work yields 3 units of food or 1 unit of luxury goods. In addition to producing food and luxury goods, resting for 1 hour (out of the 5 hours she has) is mandatory for Kayla after 2 hours of producing food. In other words, if she wishes to allocate strictly more than 2 hours into producing food, she must first rest for 1 hour. Suppose that Kayla trades with outside merchants such that PF = 2 and PL = 5. 3 / 8 a. Sketch on the graph below the PPF, the CPF, the point of production, and shade the areas corresponding to the gains from trade. Clearly label your graphs (i.e., indicate values for slopes, intercepts, kink(s), and point of production). Note that luxury goods are on the y-axis and food is on the x-axis. (2 points) b. Explain how you derive the PPF. (1 point) QL CL CF QF