Question

Assume a country produces haircuts and shirts with inputs of labour. The country has 1000 hours of labour available. A haircut requires ½ hour of labour, while a shirt requires 5 hours of labour.
a. Construct country’s production- possibility frontier. (2 marks)
b. The country is faced with massive unemployment. How will the PPF be impacted? Explain and indicate on graph. ( 1 mark)
c. The country discovers new technology and moves towards automation. Justify how this will impact the PPF for the economy. Also, indicate the same through the graph. (1mark)

Answer 1

Answer:

. The total available labour hours is 1000, so to find the maximum amount of each good we can produce