Question

5. An economy consists of three workers, Farris, Doreen, and Muneeb. Each works ten hours a day and can produce two services; mowing lawns and washing cars. In an hour, Farris can either mow one lawn or wash one car, Doreen can either mow one lawn or wash two cars, and Muneeb can either mow two lawns or wash one car.

a. Calculate how much of each service is produced under the following circumstances, which we label A, B, C and D:

(A) All three spend all their time mowing lawns. (B) All three spend all their time washing cars. (C) All three spend half their time on each activity. (D) Farris spends half his time on each activity, while Doreen only wash cars and Muneeb only mows lawns.

b. Graph the production possibility frontier for this economy using your answer to part (a), identify points A, B, C, and D on your graph.

c. Are any of the allocations circulated in part (a) inefficient? Explain

Answer 1

Scenario	Lawns mowed	Cars washed
All three spend all their time mowing lawns (A)	40	0
All three spend all their time washing cars (B)	0	40
All three spend half their time on the activity ©	20	20
Farris spends half his time on each activity, while Doreen only washes cars and Muneeb only mows lawns.	25	25
	Farris	Doreen	Muneeb
Washing cars (per hour)	1	2	1
Mowing lawns (per hour)	1	1	2
Workings
A
Farris will mow 10 lawns in 10 hours
Doreen will mow 10 lawns in 10 hours
Muneeb will mow 20 lawns in 10 hours.
B
Farris will wash 10 cars in 10 hours
Doreen will wash 20 cars in 10 hours
Muneeb will wash 10 cars in 10 hours.
C
If they spend half their time ( 5 hours per day)
Farris will mow 5 lawns and wash 5 cars.
Doreen will mow 5 lawns and wash 10 cars.
Muneeb will mow 10 lawns and wash 5 cars.
D
Farris spends half his time on each activity.
Farris will mow 5 lawns and wash 5 cars.
Doreen only washes cars- 20 cars
Muneeb only mows lawns - 20 lawns
Allocation	Efficient	Not efficient
A	Efficient
B	Efficient
C		Not efficient
D	Efficient
Points A, B, and D are efficient as they are on the PPF.
Point C is inefficient since it is below the PPF.