Figure: Drums and Shoes.
Given the graph of the production possibilities frontier in the figure, which of the following statements is TRUE?
A) The country has 2 units of labor, and it takes 0.5 units of labor to produce 1 unit of either good.
B) The country has 3 units of labor, and it takes 1 unit of labor to produce 3 drums and 1 unit of labor to produce 3 1/3 pairs of shoes.
C) The country has 4 units of labor, and it takes 2 units of labor to produce 8 drums and 3 units of labor to produce 3 shoes.
D) The country has 5 units of labor, and it takes 1 unit of labor to produce 1.8 drums and 1 unit of labor to produce 2.5 shoes.

Question

Figure: Drums and Shoes. 
Given the graph of the production possibilities frontier in the figure, which of the following statements is TRUE?
A) The country has 2 units of labor, and it takes 0.5 units of labor to produce 1 unit of either good. 
B) The country has 3 units of labor, and it takes 1 unit of labor to produce 3 drums and 1 unit of labor to produce 3 1/3 pairs of shoes. 
C) The country has 4 units of labor, and it takes 2 units of labor to produce 8 drums and 3 units of labor to produce 3 shoes. 
D) The country has 5 units of labor, and it takes 1 unit of labor to produce 1.8 drums and 1 unit of labor to produce 2.5 shoes.

Quizplus · Accepted Answer

The production possibilities frontier shows the different combinations of two goods that a country can produce with its given resources and technology. The slope of the frontier represents the opportunity cost of producing one good in terms of the other. In this case, the slope is steeper for shoes, indicating that more and more drums are given up for each additional pair of shoes produced. Option B correctly identifies the amount of labor the country has and the amount of labor required to produce each good, based on the coordinates of the points on the frontier. Options A, C, and D do not accurately reflect the information presented in the graph.