Chapter 1, Problem 21AA

To determine

To discuss: The movement from point B to point C on production possibility curve.

Explanation of Solution

PPC: The full of PPP is Production Possibility Curve, It represents all the combination of good and/or services that can be produced with the available resources.

As per the given graph, it can be said that:

Point A: If 4 tables are produced then there is no wood left to produce bookshelves.

Point B: If 3 tables are produced then 4 bookshelves can also be produced with the available wood.

Point C: If 1 tables are produced then 7 bookshelves can also be produced with the available wood.

Point D: If 8 bookshelves can also be produced then there is no wood left to produce tables.

In order to move from Point B to Point C, the carpenter should use wood to produce only 1 table so that 7 bookshelves can also be produced. Thus, wood should be allocated accordingly.