PPF Homework

Use the table to work Problems 1 and 2. Suppose that Yucatan’s production possibilities are
given in the table.
Food Sunscreen
1. a. Draw a graph of Yucatan’s PPF and explain (pounds per (gallons per
how your graph illustrates a tradeoff. month) month)
300 and 0
200 and 50
100 and 100
0 and 150

As we can see in the figure, the

tradeoff is illustrated because for
Yucatan to be able to produce
more of one of the elements, the
production of the rest will be
reduced.
 b. If Yucatan produces 150 pounds of food per month, how much sunscreen must it
produce if it achieves production efficiency?

If 150 pounds of food is produced, then Yucatan must produce 75 gallons of

sunscreen to achieve a production efficiency of the month.

c. What is Yucatan’s opportunity cost of producing (i) 1 pound of food and (ii) 1
gallon of sunscreen?

Since it is observed that the behavior of the Yucatán PPF is linear, it can be said that
the opportunity cost of producing 1 pound of food is the same in all quantities.
The opportunity cost of 50 gallons of sunscreen is 100 pounds of food.
That's an opportunity cost of 0.5 gallons of sunscreen per pound of food.
Under the same reasoning the opportunity cost of producing 1 gallon of sunscreen is
the same in all quantities.
The opportunity cost per 100 pounds of food is 50 gallons of sunscreen resulting in
an opportunity cost of 2.0 pounds of food per gallon of sunscreen.

2. What feature of a PPF illustrates increasing opportunity cost? Explain why Yucatan’s
opportunity cost does or does not increase.

As previously stated, the behavior of this line therefore we can affirm that an
increasing opportunity cost of food is not faced because the opportunity cost remains
constant.
Resources must be kept equally productive in both.

3. In problem 1, what is the marginal cost of 1 pound of food in Yucatan when the
quantity produced is 150 pounds per month?

Is equal to 0.5 gallons of sunscreen per pound of food.

4. The table describes the preferences in

Sunscreen Willingness to
Yucatan.
(gallons per pay
a. What is the marginal benefit from sunscreen and month) (pounds of food
how is it measured? per gallon)
25 3
The marginal benefit is those benefits that the
75 2
person who consumes the gallon enjoyed, for
125 1
example, a projection before the sun's rays or a
longer duration of the product due to the amount of it that exists and is equal to the
availability of making a payment for said product.

b. Use the table in Problem 1. What does Yucatan produce to achieve allocative
efficiency?
5. Suppose a society in which the only worker is Helen. She distributes her production
time between haircuts and baking bread. Each hour she dedicates to haircuts she can
manage to generate 4 of them and each hour she dedicates to baking bread, she can
produce 8 bread bars. Supposing Helen works a total of 8 hours per day, draw her
production possibility frontier.

6. In reference to the last problem, which of the following points is efficient? Which one is
attainable?
a. 28 haircuts per day, 16 bread bars per day

This option does not work because it takes 7 hours to make 28 haircuts and to

make 16 bread bars it takes 2 hours, which in total would add up to 9 hours of
work that exceeds the time Helen has available per day.
b. 16 haircuts per day, 32 bread bars per day

This option is productive because to achieve 16 haircuts and prepare 32 bread

bars, 4 hours per activity are required, which leads us to assume that the
available 8 hours are used.

c. 18 haircuts per day, 24 bread bars per day

This last option is the most achievable for 8 hours, 7 and a half hours will be
worked, leaving half an hour that can be considered dead time due to transfers
or various factors beyond Helen's control, in this way 4 and a half are assigned
to the cut of hair and 3 to prepare bread bars.