XI. Tasks for thought. 1. A tribe living on a tropical island includes five workers whose time is devoted either to gathering coconuts or to collecting turtle eggs

1. A tribe living on a tropical island includes five workers whose time is devoted either to gathering coconuts or to collecting turtle eggs. Regardless of how many other workers are engaged in the same occupation, a worker may gather either 20 coconuts or 10 turtle eggs a day.

a) Draw the production possibility frontier for coconuts and turtle eggs.

b) Suppose that a new climbing technique is invented making the harvesting of coconuts easier. Each worker can now gather 28 coconuts a day. Draw the new production possibility frontier.

2. Figure I shows a society’s production possibility frontier for cameras and watches.

a) Identify each of the following combinations of the two goods as being either efficient, inefficient, or unattainable: 60 cameras and 200 watches;

60 watches and 80 cameras;

300 watches and 35 cameras;

300 watches and 40 cameras;

58 cameras and 250 watches.

b) Suppose the society is producing 300 watches and 40 cameras, but wishes to produce an additional 20 cameras. How much output of watches must be sacrificed to enable these extra cameras to be made?

Cameras

60

40

100 200 300 400

Watches

3. Have a look at Figure II and associate each of the points (A, B, C, D) with one of the following statements:

a) A combination of goods which cannot be produced by society given its current availability of resources and state of technology.

b) The combination of goods produced by an economy with full employment which wishes to devote its resources mainly to the production of investment goods.

c) A combination of goods produced by an economy in recession.

d) The combination of goods produced by an economy with full employment which wishes to devote its resources mainly to the production of goods for consumption.

Producer goods

* D

* C

* A

* B

0 Computer goods