Question

Your friend Sam has been asked to prepare appetizers for a university reception during homecoming weekend. She has an unlimited amount of ingredients but only six hours to prepare them. Sam can make 300 mini-sandwiches or 150 servings of melon slices topped with smoked salmon and a dab of sauce per hour. Draw Sam's production posiibilities frontier.

Answer 1

Answer:

Downward sloping curve with 300 intercept on mini sandwich axis, 150 intercept on melon spices

Explanation:

PPC reflects production combinations (2 goods), which can be produced given same resources & technology. It is downward sloping because of inverse relationship between two goods, one good increase leads to other good decrease - given same resources & technology.

In this case, it is with analogous factors : production possibilities with respect to unlimited ingredients (resources), limited time. Although resources are given to be unlimited, PPC is likely to be downward sloping : because of inverse relationship between goods - based on time constraint (one good increase will withdraw time from other good & reduce it).

The PPC intercept on X & Y axis represents the maximum amount of that axis good, which can be produced. So: it has 300 intercept on mini sandwich axis, 150 intercept on melon spice axis.

The slope & shape of PPC depends on Marginal Opportunity Cost, which depends on relative efficiency of resources in two goods.

Resources equally efficient - Constant Good Sacrifise Ratio i.e MOC - PPC straight line. Resources unequally efficient - Increasing Sacrifise Ratio (from efficient to inefficient good) i.e MOC rising - PPC Concave. Increasing Sacrifise Ratio (from inefficient resources to efficient resources) i.e MOC falling - PPC Convex.

If MOC between mini sandwiches & melon spices is constant, PPC is straight line . If MOC between them is rising, PPC is concave. If MOC between them is falling, PPC is convex.