Simple PPF question

Question

Econoland and Free Enterprise are two economies each producing two goods: airplanes (A) and grains (G). Currently the two economies do not trade with one another. The table below provides information about the amount of labor needed to produce one airplane or one ton of grains for each economy. Assume that labor is the only input needed to produce either airplanes or grains.

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How do I create a 2x2 table to show the maximum number of airplanes and tons of grain both countries can produce if they each have 3000 hours of labor available for production?

score 1 · Accepted Answer · edited Feb 16 '15 at 18:56

             Econoland              Free Enterprise
Airplanes       100                       150
Grain            50                       100

The opportunity cost for Econoland to make Airplanes in terms of Grain is OCa=50/100 alternatively the OC to produce grains in terms of Airplanes is OCg=100/50

The OC for Free Enterprise for Airplanes in terms of Grain is OCa=100/150 The OC for Grain in terms of Airplanes is OCg=150/100

Therefore the OC for Airplanes is lower for Free enterprise. While the Cost of producing grains for a lower opportunity cost is also lower for Free Enterprise.

This is the beginning of answering your question first finding the opportunity cost and then finding how much each can make in 1 hour. then you can figure out how much they can make in 3000 hours. — Erica, Feb 16 '15 at 18:56

Simple PPF question

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