The labour force of ten persons in the tiny economy of Jamrock can produce only Rum and Coffee. Each worker is capable of producing either 3 gallons of rum or one pound of coffee per day. [2 points each]
a) Sketch the economy’s production possibilities frontier.
b) Explain what it is showing.
c) Is the combination of 7 gallons of rum and 7 pounds of coffee attainable? Is it efficient? What about 15 gallons of rum and 10 pounds of coffee?
d) Suppose the neighbouring island of Cube-land is willing to sell each pound of its coffee for 11⁄2 gallons of rum. Sketch Jamrock’s consumption possibilities.
e) Given the option of trading with Cube-land, what should Jamrock produce and trade in order to attain the consumption of 15 gallons of rum and 10 pounds of coffee?

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