Practice Exercise

Lecture 1
 Exercise1
• Suppose, there are 50 labors available in an economy. It
takes 2 labors to produce an apple or 5 labors to produce a
banana.
• Make a schedule and draw society’s production possibility
frontier (PPF).
• Show and explain an inefficient point and an unattainable
point in the graph.
• Explain why this PPF a straight line?

• Show and explain what happens in the graph, if there are

100 labors available.
   A
Exercise 2
B C D

Wheat 0 1 2 3

Rice 15 12 8 0

a.)Draw the PPF from the above following data.

b.)What is the opportunity cost of Wheat in terms of rice from point B
to point C?
c) Indicate an inefficient point. Why those points inside the PPF are
inefficient?
d) Indicate an efficient point. Why points on the PPF are efficient?
e) Indicate an unattainable point. Explain why points outside the
frontier are unattainable