Points on the graph:
A(4,140)
B(12,120)
C(8,100)
D(14,80)
E(8,60)
a) According to the PPF, Person A has ___ hours to allocate between work and leisure.
b) Between points C and E, the opportunity cost of earning an additional $10 income is ___.
c) Between points C and A, the opportunity cost of one hour leisure is ___ in forgone income.
-------
a) 8 (I looked at point C and did the slope of the point...)
b) 0 (I think it's 0 because no opportunity lost over leisure??)
c) $10 (took the difference between the points--basically rise/run and got $10...)
Are my answers correct? If not, please correct them? Thanks.
Unfortunately, I am having trouble visualizing the graph. what are on each axis? Is the PPF on the graph drawn? Are you given a wage rate?
b) is unlikely to be right as about everything we do has an opportunity cost, including giving up leisure time.
Wage rate is not given, hours (leisure) on x-axis, income (work) on y-axis
Yes, your answers are correct!
a) To determine the hours Person A has to allocate between work and leisure, you can look at the x-coordinate of point C, which is 8. This represents the number of hours spent on work. Since the PPF (Production Possibilities Frontier) shows the trade-off between work and leisure, you can infer that the remaining hours will be allocated to leisure. Therefore, Person A has 8 hours to allocate between work and leisure.
b) To find the opportunity cost of earning an additional $10 income between points C and E, you need to calculate the slope (or the rate of change) of the PPF curve between these two points. In this case, the slope is zero, indicating that there is no opportunity cost associated with earning an additional $10 income. This means that for every additional $10 earned, no leisure time needs to be sacrificed.
c) Similarly, to determine the opportunity cost of one hour of leisure between points C and A, you need to calculate the slope between these two points. Taking the difference in income values, which is $40 ($100 - $140), and dividing it by the difference in leisure hours, which is 4 (8 - 4), you get $10 as the opportunity cost of one hour of leisure in forgone income.
Overall, your explanations and calculations are correct. Well done!