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5. Assume that the economy of Fruitland can produce two goods, apples (A) and bananas (B)....



5. Assume that the economy of Fruitland can produce two goods, apples (A) and bananas (B). The production of one apple requires one unit of labor (L) and two units of capital (K). One banana requires two units of labor and one unit of capital. Fruitland is endowed with 600 units of labor and 600 units of capital.

a. Draw the production possibilities frontier (curve) for Fruitland. Put apples (A) on the vertical axis. (HINT: For every 20 apples, determine how many bananas can be produced. How many apples and bananas can be produced if all resources are devoted to apples? If 20 less apples are produced, how many bananas can be produced? 40 less? Etc. Construct a table, and then graph it. It is helpful to include in your table the resources being devoted to the production of each good as well as the total amounts of labor and capital being used.)

b. Is the production of 200 apples and 200 bananas feasible? Efficient? What about 220 apples and 240 bananas?

c. What can be said about the utilization of resources when 100 apples and 100 bananas are produced?

d. What is the opportunity cost of increasing the production of apples from 280 to 300? From 0 to 20 units?

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dalle 워,Apple Lik, tee Ba nana pood a) 300. 300 600 3oo o 280280 560 320 40 40 86oRo 520. 34080 80 240 840 48o 360 120 120 920 20 8o 160 60 얹00200 400 400 200 200 180 80 30 420 840 10 160 160 320 4403H дао 140 40 8460 320 30 180.180 良40 480 360 840 loo 100 500 400 50 260 80 8 60 5 440 6 Во 60 120 540 480 290 560 520 8 58D 560 o 40 40 8 0 40 0 0 600 600 300 a) PPF %) yes poodnot 200 n& 2DD B feasible ,as this (0,300) 300 (1001850) 250 200 ,200) ouly 160 B com thus 22 A, 160 not feasible 20。 e puoduced not ethident lo c) wen 100 A, then May (300p) 10o 200 a 350 300 B

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