Question

Assume you are pursuing a bachelor’s degree and you have 40 hours to divide between work and school in a week. You choose the amount of time you spend on each based on the classes you take and the hours you request at work. The degree will take you 3 years to complete if you dedicate 40 hours a week and do not take summers off. Obviously, if you devote no time to school, you never get your degree.

1. Use the chart below to draw the Production Possibilities Frontier with work time on the Y axis and school time on the X axis. (10 points)

	Time spent Working	Time spent on School	Years needed to get a bachelor’s degree
A	0	40	3
B	10	30	4.5
C	20	20	6
D	30	10	8
E	40	0	Never Complete

*Time listed on the chart is in hours per week.

Answer 1

PPF( production possibility frontier ) is a curve that shows production possibilities of two goods with the given resources and technique of production.

By dividing 40 hours between work and school ,to complete the degree , the table showing the different production possibilities of time spent on school and time spent on working is as follows ( given in the question)

	Time spent On working	Time spent School
A	0	40
B	10	30
C	20	20
D	30	10
E	40	0

By plotting above points on the graph we have to get PPF we have,

Above , there is a Production possibility frontier curve , in which time spent on schooling is shown on X axis and time spent on work is shown on Y axis .

It is clear from above that PPF is a straight line curve, this is because slope of the curve is constant throught different production possibilities points . Slope of the curve is shown by Marginal oprotunity cost which is constant , therefore it's PPF is a straight line .

Marginal oprotunity cost =

change in Y / Change in X

Using this formula we have ,

Marginal cost at point A = 10/10= 1

Marginal cost at point B = 10/10= 1

Marginal cost at point C = 10/10= 1

Marginal cost at point D = 10/10 = 1

Marginal cost at point E = 10/ 10= 1

Which is clear that it is constant throughout all points i.e 1 .