Suppose that a country produces wine (W) and cheese (C) using its supply of 400 hours of labor (labor hours) and 600 acres of land (acres) (T). To produce a gallon of wine requires 10 hours of labor and 5 acres of land. A pound of cheese requires 4 hours of labor and 8 acres of land.
(a) Which good is labor intensive? Which good is land intensive?
(b) Is it possible for this country to produce 10 gallons of wine and 50 pound of cheese with the resources available? Explain your answer [Hint: you need to check whether both the land constraint and the labor constraint are satisfied]
(c) Putting wine on the horizontal axis and cheese on the vertical axis, graph the production possibility frontier for this economy.
(d) How is the production possibility frontier affected by an increase in the supply of labor by 100 hours? Complete your answer by explaining the implications on the production possibilities of this economy.