Question

Smallville has a linear production possibility frontier in the production of good X and good Y. It can produce 6 of X per hour or 8 of Y per hour. Suppose it has 240 hours of labor and divides labor hours equally between production of good X and good Y. What is the MAXIMUM number of good Y it can produce in the time it has allocated to Y production?

Answer 1

The maximum amount of good Y produced will be 960.

Step-by-step explanation:

Smallville has a linear production possibility frontier in the production of good X and good Y.

It can produce 6 of X per hour or 8 of Y per hour.

It has 240 hours of labor and divides labor hours equally between the production of good X and good Y.

It means that both good X and good Y get 120 hours of labor each.

The amount of good Y produced in 120 hours

=
`120\ *\ 8`

= 960 units