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There are two primary inputs, labor (L) and land (T ), and two outputs, goods 1 and 2. The production function of good 1 is
y1 = L1/4T 3/4 ,
and the production function for good 2 is
y2 = L3/4T 1/4.
There is one unit of labor and one unit of land available for the production of goods 1 and 2.
(a) Sketch in a box diagram and compute a formula for the set of ef?cient allocations of land and labor to the production of goods 1 and 2.
(b) Sketch the total production possibility set for goods 1 and 2.
(c) What allocation of labor and land to the production of the two outputs maximizes the sum of the two outputs,y1 + y2?
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