Question

Suppose that there are 20,000 hours of labor available in country A, and that 5 hours of labor are required to produce one unit of S, while 4 hours are required to produce one unit of T. Draw A's PPF and find its slope. what is the relative price of S to T (Ps/Pt)?

Answer 1

PPF attached file

relative price of S yo T 1.2

slope 0.8 (Pt in the X axis)

Step-by-step explanation:

We should calculate the ouput at at P(t) = 0

and at P(s) = 0

Pt = 0 then 20,000 are allocated to produce product S therefore 20,000/ 5 = 4,000 max cappacity to produce Ps

Ps = 0 all the hour are assinged to Pt 20,000/4 = 5,000

To find the slope when Pt is in the X axis we do:

-4/5 = -0.8 each unit of T decrease output of S by 0.8

while a unit of S decrease output of T by 5/4 = 1.2