Suppose that wine and cloth are constant returns to scale industries that always use the two inputs (land and labor) in the same proportion. That is, one unit of land must be used in conjunction with one unit of labor to get one unit of output. Assume that the initial endowment is 50 units of land and 60 units of labor. Draw the production possibility frontier between wine and cloth. Be sure to label your picture.

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Welfare Analysis

Welfare analysis of the society is related to welfare economics. From the economic point of view former welfare economics refers to that subject which uses the techniques of microeconomics to analyse and evaluate the welfare at the economic or aggregate level.