Problem
Schools or Aircraft Careers?
Consider a country that has a total of 12 units of labor, which can be used to make Aircraft
Careers or to be used for building schools. One Aircraft Careers takes 6 units of labor to produce and 1 School takes 2 units of labor to build.
I. Explain why scarcity exists in this economy. Use the data as evidence of your reasoning.
II. What is the maximum quantity of Aircraft Careers that can be produced?
III. What is the maximum quantity of Schools than can be built?
IV. Draw the nation's production possibility curve.
V. What is the opportunity cost of Aircraft Careers in this nation?
VI. Explain why the nation can't build both 3 Aircraft Careers and 4 Schools.
VII. Explain why the nation shouldn't build both 1 Aircraft Careers and 2 Schools.