Figure 3-4 Perry\'s Production Possibilities Frontier Jordan\'s Production Possi

Question

Figure 3-4 Perry's Production Possibilities Frontier Jordan's Production Possibilities Frontier 20 Troems 20 18 16 14 12 10 18 16 14 T 12 10 1 2 3 4 5 6 7 8 vels 1 2 3 4 5 6 7 8 vels Refer to Figure 3-4. Suppose Perry is willing to trade 4 poems to Jordan for each novel that Jordan writes and sends to Perry. Which of the following combinations of novels and poems could Jordan then consume, assuming Jordan specializes in novel production and Perry specializes in poem production? a. 4 novels and 2 poems b. 2 novels and 8 poems c. 3 novels and 6 poems d. 1 novel and 14 poems

Explanation / Answer

Jordan specializes in Novel so Jordan will write 4 novels only.

Perry writes only poems so poems = 12

Trade is 1 novel = 4 poems

so, 2 novels = 8 poems

Jordan will give 2 novels to perry and in exchange will get 8 poems.

so, jordan left with novels = 4-2 = 2

Poems = 8

so, answer is (b).

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