The effect on PPF for Wheat and cloth if the supply of capital falls by 10% and the supply of labor increases by 10%. Concept Introduction: Production Possibility Frontier : It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs .

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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically.

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Chapter 2, Problem 6P

To determine

The effect on PPF for Wheat and cloth if the supply of capital falls by 10% and the supply of labor increases by 10%.

Concept Introduction:

Production Possibility Frontier: It is a curve which shows the maximum possible output of two goods with the given set of efficiently used inputs .

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1. Riaz has a limited income and consumes only Apple and Bread. His current consumption choice is 3 apples and 5 bread. The price of apple is $3 each, and the price of bread is $2.5 each. The last apple added 5 units to Sadid's utility, while the last bread added 7 units. Is Riaz making the utility-maximizing choice? Why or why not? Do you suggest any adjustment in Riaz's consumption bundle? Why or why not? Give reasons in support of your answer. State the condition for a consumer's utility maximizing choice and illustrate graphically.

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