Ice cream and iPhone solution

Ice cream and iPhones: how many can we have? Overview: In this cconomy, the resources are 2 software developers, 2 MBA’s, 4 high school grads, and 4 cows. Each resource can be hired by an ice cream factory or by an iPhone development facility. The list below shows what the resource produces when it works for the ice cream factory and for the iPhone facility. o1 Software developegg can make 12 iPhones or 11 gallons ice cream °A Cowd can make 0 iPhones or 15 gallons ice cream ° MBA® can nmka HkiPhones or 8 gallons ice cream ¢ A High school grad can make 7 iPhones or 9 gallons ice cream 1o make this go smoothly. first take a moment to find the opportunity cost for each resource by completing the table below. Opportunity cost of producing ice Opportunity cost of producing iPhones crgam \ =number of iPhones given up for each | =gallons of ice cream given up for each | gallon of ice cream iPhone (el i _ = # of iPhones/# gallons of ice cream =gallons of ice cream / # of iPhones (%nfiu\arc |2 iPhones per gallon 1) Gallons of‘ice | developers | T of ice cream —\":_‘ cream per 1?h0nc g | MBAs iPhones per gallon S Gallons of ice IE5 Gt ¥ 4‘7 \ of ice cream cream per iPhone \ High school grads B 77 iPhones per gallon 9 Gallons of ice |t L of ice cream 6y cream per iPhone Cows T S A \ iPhones-pas=geton- /§ , Gallons of ice \_ AU PR ! O plsiseeremT cream pessrizsme Solve the following resource allocation problems. Be sure to use all resources for every allocation. 1" allocation: produce ice cream only. lce eream produced: ;ilfzi iPhone produced: 0 2 H?gh SO}’C‘B/ 9'214 2 ) %e 2" allocation: produce iPhones only. CW)fi S flce C,%/‘L 1Pl 43 lce cream produced: 0 iPhone produced: é)é - = e dan- /4 3 Allocation: Divide your resources in half and have half produce Ice Cream and half produce iPhones. : To do this, divide each resource type in half; and then place half of the resource in the ice cream facility, and hall'in the iPhone development facility. Count the lce Cream and iPhones produced. Ice cream produced: é ; " iPhone produced: &é 4" Allocation: Now re-allocate one resource from Iee Cream to iPhones and one resource from iPhones to lee Cream so that you produce more Ice Cream than before but also MORE iPhones. lce cream produced: T? _ iPhone produced:fi ’\ ém@ dfi\)@[?fl/—% Tflg}le - How were you able to COWS L iag T d“@m Other resice albeation 75 fire. vce cleam s [ as lm(j % JW,( Hg:gd@ e Tee iy & et more Ceamn. o

50%\)0?&’ I b?ze, t/&rs e Claam . *L"Q nae 1 7>/{a7zes ofi%} 5" Allocation: N m\ allocate all resources so they are producing what they are hcl\ oL re?) CE‘ZAI lee erzam produced: lgii iPhone produced: £ 6" Allocation: From the 53" allocation. p-oduce more iPhones in the most efficient way you can (by giving up the least amount of ice cream per additional iPhone). This will involve moving one resource (one resource) from ice cream to iPhones. HINT: look for the lowest opportunity cost in terms of ice cream given up per additional iPhone. — /{'( % Lowest OC Ice cream produced: 5 _ iPhone produced: g 1. Graphing the PPF iPhones 140 [ | \ ] . \ e —_ ! L) N i 8 il EA ARCE ’ = L | \\ (7‘1‘ ) [ | | [ { . \J%,fl) 40 27 '\\ [Fre T e R o« | TN L 20 s [ | RO 40 60 80 100 120 140 1,0 ) - ICE CR M 1) Use the six allocations above to plot your production points on the graph. Draw the Frontier. 2