A country produces only rice and cassava using a fixed 1,000 labour‑hours.

Before a technological change each hour of labour can produce either 2 kg of rice or 3 kg of cassava. After the change the productivity of rice rises to 3 kg per hour, while cassava productivity remains 3 kg per hour.

(a) Write the production‑possibility frontier (PPF) equations for rice (R) and cassava (C) before and after the technology.
(b) Compute the opportunity cost of producing one additional kilogram of rice before and after the change.
(c) State which good the country has a comparative advantage in each period.
(d) If the country wishes to produce 800 kg of rice, how many labour hours are required and how much cassava can be produced before and after the technology?

Question

A country produces only rice and cassava using a fixed 1,000 labour‑hours.

Before a technological change each hour of labour can produce either 2 kg of rice or 3 kg of cassava. After the change the productivity of rice rises to 3 kg per hour, while cassava productivity remains 3 kg per hour.

(a) Write the production‑possibility frontier (PPF) equations for rice (R) and cassava (C) before and after the technology.
(b) Compute the opportunity cost of producing one additional kilogram of rice before and after the change.
(c) State which good the country has a comparative advantage in each period.
(d) If the country wishes to produce 800 kg of rice, how many labour hours are required and how much cassava can be produced before and after the technology?

Accepted Answer

Pre‑technology PPF: C = 3000 - 1.5R; post‑technology PPF: C = 3000 - R. Opportunity cost of rice: 1.5 kg cassava before, 1 kg cassava after. Comparative advantage: cassava before, rice after. To produce 800 kg rice: before - 400 labour hrs, 1800 kg cassava; after - 266.7 labour hrs, 2200 kg cassava.

Neco Model Questions Vol1 2022 Economics Question 20

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