Answered: b) You discover a more efficient way of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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b please assist with the following question show all working out and a short explanation please

You are the sole survivor of a shipwreck on a desert island. You do not expect to be rescued.
You can either use your time to grow food to consume immediately, or to build new tools and
buildings (capital) which will increase your supply of food in future years.

b) You discover a more efficient way of harvesting coconuts, that increases your food
production by 50%, taking labour input and other inputs as given. Show the impact on
your total production and labour supply (i) in the short run and (ii) in the longer term,
if this allows you to spend some of your time producing capital.

B1.
You are the sole survivor of a shipwreck on a desert island. You do not expect to be rescued.
You can either use your time to grow food to consume immediately, or to build new tools and
buildings (capital) which will increase your supply of food in future years.
a) Sketch your initial production function (total output of food + capital in terms of your
labour input), and show how to turn this into a feasible set. Show your optimal choice
of how
you spend your time, assuming you initially consume everything you produce.
b) You discover a more efficient way of harvesting coconuts, that increases your food
production by 50%, taking labour input and other inputs as given. Show the impact on
your total production and labour supply (i) in the short run and (ii) in the longer term,
if this allows you to spend some of your time producing capital.

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