Question

suppose that a simple society has an economy with only one resource, labor. labor can be used to produce only two commodities—x, a necessity good (food), and y, a luxury good (music and merriment). suppose that the labor force consists of 100 workers. one laborer can produce either 5 units of necessity per month (by hunting and gathering) or 10 units of luxury per month (by writing songs, playing the guitar, dancing, and so on).

using the line drawing tool, draw this economy’s production possibilities frontier (ppf). (be sure that the ppf intersects both the y-axis and the x-axis.)

carefully follow the instructions above and only draw the required object.

what is the meaning of the x- and y-intercepts?

a. these are the limits of production if all resources are used to produce both goods.
b. these points show the preferred amount of goods x and y that a society will produce.
c. these are the limits of production if all resources are used to produce only one good.
d. these points demonstrate an inefficient use of resources.

Explanation:

To determine the meaning of the X - and Y - intercepts of the Production Possibilities Frontier (PPF), we analyze each option:

• Option A: The intercepts do not represent production when resources are used for both goods. When resources are used for both goods, we are at a point inside or on the PPF (not the intercepts), so A is incorrect.
• Option B: The intercepts are not about the "preferred" amount of production. Preferences are related to demand and consumer choice, while the PPF is about production capabilities, so B is incorrect.
• Option C: The X - intercept occurs when all resources (labor, in this case) are used to produce good X (the necessity good). Similarly, the Y - intercept occurs when all resources are used to produce good Y (the luxury good). So these intercepts represent the maximum production of one good when all resources are devoted to that single good, which matches the description in option C.
• Option D: The intercepts are points of maximum (efficient) production when all resources are used for one good, not inefficient use. Inefficient use is represented by points inside the PPF, so D is incorrect.

Answer:

C. These are the limits of production if all resources are used to produce only one good.