Production Possibilities Frontier Exercise Guide
Translated by
ScribdTranslationsProduction Possibilities Frontier Exercise Guide
Translated by
ScribdTranslationsExercise guide
Production possibilities frontier
Let's assume that the production possibilities of a company are represented by the FPP1.
1. If we start from point D, we can say that:
a) There is unemployment. Therefore, the economy could produce more of both goods.
b) Clothing production can be increased if we reduce food production.
c) Food production can be increased if we reduce clothing production.
2. If the economy moves from A to B and from B to C
There is a technological improvement in the production of food and clothing.
There is a technological improvement in food production, but not in clothing production.
c) The opportunity cost of producing food increases
d) The opportunity cost of producing clothing increases.
e) None of the above
3. If we move from FPP1 to FPP2, the most likely cause is:
a) A technological improvement in food production
b) A technological improvement in clothing production
c) A general technological improvement
d) An increase in the population
e) All of the above
4. The following data of an economy are known:
Catholic University of the Most Holy Conception
Prof. Helga González T.
A B C D E F G
Calculators 21 20 18 15 11 6 0
Boats 0 1 2 3 4 5 6
a) Calculate the opportunity cost of moving from D to E of the boat.
b) Calculate the opportunity cost of the calculators from D to E
c) Draw the PPF
d) Determine the opportunity cost of moving from A→B, B→C, C→D, D→E, E→F, F→G. And comment on them.
results. Do you find the obtained results logical?
5. In country A, there are 4 units of resources (R) available. These can be used for wheat production, with a technique
given by the production function T = 100R (each unit of resources can yield 100 kg of wheat) or to the
corn production, for which the production function is M = 30R. Country B, on the other hand, has 4 units
of resource (R), and its production functions are, respectively T = 40R, M = 20R.
a) Graphically represent the production possibility frontier of A and B.
b) Discuss the absolute and comparative advantage of each of the goods.
c) Assuming that each country specializes completely in the good in which it has a comparative advantage, build its
borders of consumption possibilities (what each of the countries can consume) for country A and country B, if the
the exchange ratio is 10T for 4M.
d) If in country A a technical innovation occurs that converts the production function of M into M = 40R, compare
the effects with those obtained in the previous section.
6. Graphically represent the Production Possibility Frontier of an economy that has 4 workers and
which can distribute them between the production of an agricultural good (X) and a manufactured good (Y) as follows:
Universidad Católica de la Santísima Concepción
Prof. Helga González T.
a) Calculate the opportunity cost of moving from point B to C.
b) Calculate the opportunity cost of moving from point C to A
c) What is the opportunity cost of increasing the production of good X from 10 to 26 units?
Florencia can read 20 pages of economics in one hour. She can also read 50 pages of sociology in one hour. She dedicates 5
daily hours to study.
a) Trace its corresponding production possibilities frontier for the reading of economics and sociology.
b) What is the opportunity cost of Florence in reading 100 pages of sociology?
8. Suppose that in the country of Econolandia they produce french fries and automobiles. For 1 kg of french fries, it is required that
1 hour of work, and for a car, 200 hours. If the country has 5,000 hours of work:
a) What is the opportunity cost of each product?
b) Build the Production Possibility Frontier (PPF) of Econolandia.
c) What would happen to the PPC if a way to produce a car in just 100 hours is invented?
9. Carol and Polly are roommates. They spend most of their time studying (of course), but they leave
some for their favorite activities: making pizza and making orange juice. Carol takes 4 hours to make 1 liter of orange juice and 2
in making a pizza. Polly takes 12 hours to make 1 liter of orange juice and 4 hours to make a pizza.
a) What is the opportunity cost of making a pizza for each of the companions? Who has the absolute advantage?
in pizza production? And the comparative advantage?
b) If Carol and Polly exchange food, who will deliver pizza for orangeade?
Catholic University of the Most Holy Conception
Prof. Helga González T.
10. Suppose Mateo has 10 hours to study and pass the physics and history exams. Draw an FPP of
the study possibilities of Mateo. If he studies inefficiently by playing loud music and talking with his
friends, where will your production be in relation to the PPF? What would happen to your PPF if Mateo studied 15
hours instead of 10?
11. We find ourselves in Gaul during the times of the Roman Empire. After so many wars against the Romans, Asterix and
Obelix are the only remaining Gallic inhabitants. In those times, there were only two things to do: hunt wild boars or
stealing chickens from the Romans. Asterix can hunt 4 wild boars per hour or steal 10 chickens per hour. Obelix, however,
can hunt 8 wild boars per hour or steal 11 chickens per hour. They have 15 hours a day to carry this out.
activities.
a) Graph the Production Possibility Frontier of Asterix.
b) Graph the Production Possibility Frontier of Obelix.
c) Calculate the opportunity cost for Asterix of stealing a Roman chicken.
d) Calculate the opportunity cost for Obelix of stealing a Roman chicken.
e) Which one should specialize in hunting wild boars and which in stealing chickens?
12. England and Scotland both produce cakes and vests. Let's assume that an English worker can produce 50
cakes per hour or 1 vest per hour. Let's assume that a Scottish worker can produce 40 cakes or 2 vests.
for now.
a) ¿Qué país tiene la ventaja absoluta en la producción de cada bien? ¿Cuál tiene la ventaja comparativa?
b) If England and Scotland decide to trade, what goods will Scotland sell to England? Explain the answer.
c) If a Scottish worker could produce only 1 vest per hour, would Scotland still benefit from trade?
And England? Explain your answer.
13. José is a young Accounting student. Currently, in his first semester, he has been assigned among his subjects
the subjects of introduction to economics and sociology. Next Monday, José will have to take tests in both subjects.
but he only has 5 hours to study. He has found that he can read 20 pages of economics in an hour;
he can also read 15 pages of sociology in an hour.
a) Trace its corresponding production possibility frontier according to the reading of economics and sociology by José.
that the production of each good corresponds to the number of pages read from each subject.
Catholic University of the Most Holy Conception
Prof. Helga González T.
What is the opportunity cost of reading 70 pages of sociology.
Pontifical Catholic University of the Most Holy Conception
Prof. Helga González T.