Reference no: EM13798066
An economy consists of three workers: Larry, Moe, and Curly. Each works for ten hours per day and can produce two services: Mowing lawns and washing cars. In an hour, Larry can either mow one lawn or wash one car. Moe can either mow one lawn or wash two cars and Curly can either mow two lawns or wash one car.
Calculate how much of each service is produced under the following circumstances. You can use a table to organize the outcomes.
All three spend all their time mowing lawns (Outcome A)
All three spend all their time washing cars (Outcome B)
All three spend half their time on each activity (Outcome C)
Larry spends half his time on each activity while Moe only washes cars and Curly only mows lawns (Outcome D)
Draw the production possibilities frontier (PPF) for this economy. Using your answers to part a), identify points A, B, C and D on your graph.
Explain why the PPF has the shape it does?
Are any of the allocations calculated in part a) inefficient? Explain
Show a point that is not feasible for this economy on the graph you drew in part b), explain why?
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