Ques. In a country, there are three firms, firm A, firm B and firm C, each producing chairs and tables. All firms run their production for 8 hours a day. In 1 hour, firm A can produce either 1 chair or 2 tables, firm B can produce either 2 chairs or 1 table, and firm C can produce either 1 chair or 1 table. Find the total production of chairs and tables when
a) All three firms spend all their time in producing chairs.
b) All three firms spend all their time in producing tables.
c) All three firms spend exactly half their time on the
production of each good.
d) Firm A spends all its time in producing tables,
firm B spends all its time in producing chairs, and firm C spends half of its
time on producing each good.
Ans. This is a questing relating to production possibilities
of different goods in an economy.
a) In the first case all the
three firms are allocating all their time (i.e., 8 hours) in producing chairs
and none on tables, therefore, the production of tables is 0. So, the production
of chairs is equal to
Total
chairs produced by firm A + Total chairs produced by firm B + Total chairs
produced by firm C
Total
chairs produced by firm A = 12 (4 x 1 + 4 x 2)
Total
chairs produced by firm B = 12 (4 x 2 + 4 x 1)
Total
chairs produced by firm C = 8 (4 x 1 +4 x 1)
= 32
chairs
So,
the total production of chairs is 32, production of tables is 0
b) In this case, all the three firms are allocating
all their time (i.e., 8 hours) in producing tables and none on chairs,
therefore, the production of chairs is 0. So, the production of tables is equal
to
Total tables produced by firm A + Total tables
produced by firm B + Total tables produced by firm C
Total tables produced by firm A = 16 (8 x 2)
Total tables produced by firm B = 8 (8 x 1)
Total tables produced by firm C = 8 (8 x 1)
= 32 tables
So, the total production of tables is 32, production
of chairs is 0.
c) In this case all firms spend exactly half their
time on producing each good i.e., 4 hours each on the production of chairs and
tables. So, the production of chairs and tables is equal to
Total chairs produced by firm A = 4 ( 4 x 1)
Total chairs produced by firm B = 8 (4 x 2)
Total chairs produced by firm C = 4 (4 x 1)
= 16
Total tables produced by firm A = 8 (4 x 2)
Total tables produced by firm B = 4 (4 x 1)
Total tables produced by firm C = 4 (4 x 1)
= 16
Total Production of chairs = 16
Total Production of tables = 16
d) In this case firms are allocating different time from
each other in the production of chairs and tables. So, the production of chairs
and tables is equal to
Total chairs produced by firm A = 0
Total chairs produced by firm B = 16 (8 x 2)
Total chairs produced by firm C = 4 (4 x 1)
= 20
Total tables produced by firm A = 16 (8 x 2)
Total tables produced by firm B = 0
Total tables produced by firm C = 4 (4 x 1)
= 20
Total Production of chairs = 20
Total Production of tables = 20