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 graph shows the maximum combinations of goods that can be produced given a fixed amount of resources. In this graph, the country has 3 units of labor, and the production possibilities curve shows that it can produce a maximum of 9 drums and 10 pairs of shoes. Therefore, it takes 1 unit of labor to produce 3 drums and 1 unit of labor to produce 3 1/3 pairs of shoes. Choice A, C and D are all incorrect as they do not match the information provided by the production possibilities frontier graph.

Figure: Drums and Shoes Given the Graph of the Production