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?

Question

Quizplus · Accepted Answer

Smallville allocates 120 hours to the production of good Y (half of 240 hours). At a rate of 8 Y per hour, it can produce 960 Y (120 hours * 8 Y/hour).

Smallville Has a Linear Production Possibility Frontier in the Production