MGEA02H3 Lecture Notes - Lecture 1: Daniel Defoe, Castaway, Coulomb
8 Jul 2015
School
Department
Course
Professor
38
MGEA02H3 Full Course Notes
Verified Note
38 documents
Document Summary
A simple example to show why the ppf bows out (why the attainable set is strictly convex) Suppose that robinson needs food and can obtain it in two ways: by catching fish or by collecting coconuts. Robinson has 5 hours available each day to find food (he needs the rest of the time to build shelter, generate clothing, etc. ). The following table tells you the number of fish that. Robinson collects in total for the various number of hours that he spends fishing each day (nf = hours per day spent fishing, f = fish per day caught): You will see that the ppf bows out (i. e. is strictly concave creating a strictly convex feasible or choice set). Incidentally, the idea that each subsequent hour spent on an activity is less and less productive is called diminishing marginal productivity (of labour). We will study this idea later this term.
