Question: Exercise on the production possibilities frontier
1. The following table shows scores that a student can earn on two upcoming exams, according to the amount of time devoted to study.
|
Hours spent Studying for Economics
|
Economics score
|
Hours spent studying for history
|
History score
|
|
10
|
100
|
0
|
40
|
|
8
|
96
|
2
|
60
|
|
6
|
88
|
4
|
76
|
|
4
|
76
|
6
|
88
|
|
2
|
60
|
8
|
96
|
|
0
|
40
|
10
|
100
|
a) Plot the production possibilities frontier (or curve) between the two subject scores.
b) Does the production possibilities frontier exhibit the law of increasing opportunity cost? (Show your worksheet. that leads you to give your answer.
c) If the student wishes to move from grade 60 to 88 in economics, what is the opportunity cost?
2. Draw a production possibilities curve. Illustrate the set of points that is attainable (feasible); the set of points that is efficient, and the set of points that is not attainable ( not feasible)..
3. Distinguish between economic efficiency and allocative efficiency.
4. Use the production possibilities curve to define economic growth.