On a Certain Small Island, There Are 100 Units of Labor

question 31

Essay

On a certain small island, there are 100 units of labor and 200 units of capital.Two goods can be produced.Good A is produced with fixed coefficients, using 1 unit of labor and 3 units of capital per unit of output.Good B is produced with fixed coefficients, using 1 unit of labor and 1 unit of capital per unit of output.Let X a denote the quantity of good A and X b be the quantity of good B that is produced.The set of feasible output combinations for this economy is restricted by the fact that it cannot use more than 100 units of labor or 200 units of capital.
a.Write down two inequalities expressed in terms of X a and X b that must be satisfied at feasible output combinations.
b.Draw a graph showing the economy's production possibility set.Put numerical labels on your graph so that this graph is precisely described.

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