Suppose an economy consists of 3 people and 2 activities. Nuri Bilge Ceylan, Orhan Pamuk and Canan Dağdeviren can work 10 hours a day to write novels or write scientific articles. Nuri Bilge can write 1 page of novel or 1 page of article in 1 hour. Orhan can write 2 pages of novel or 1 page of article in 1 hour. On the other hand, Canan can write 1 page of novel and 2 pages of article in 1 hour.
a. How many pages will be produced in the economy in the cases we call A, B, C and D below? Draw a chart about it.
• Situation where each producer devotes all his time to writing novels (point A)
• Situation where each producer spends all his time writing articles (point B)
• Situation where each producer dedicates half of his time to each activity (point C)
• The situation where Nuri Bilge devotes half of his time to writing novels and half of his time to writing articles, Canan devotes all of his time to writing articles, and Orhan devotes all of his time to writing novels (point D)
b. Draw the production possibilities curve for the above situations (production possibilities frontier showing points A, B, C, D)
c. Can any of the points A, B, C and D be "inefficient"?
d. The marginal rate of transformation is the amount of other good that must be given up in order to increase the production of one of the goods by one unit on the production possibilities curve. In other words, it expresses the opportunity cost at that point. What is the marginal conversion rate when going from point A to point D? What is the marginal conversion rate when going from point D to point B? To. Explain why the production possibilities curve is like this.