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Question-3 Consider the figure below which shows the combined production function of Anna and Bob: Wheat (bushels) [slope at A slope at Y] Z A Y X Free-time (hours) a) Assume a case where Anna works the land owned by Bob. By referring to the diagram above, explain how does Anna rank the possible allocations marked as X, Y, Z and A? b) Now assume a separate case whereby Anna is a slave to Bob. It is also given that Anna recently suffered from Corona virus and thus her nutrition needs are amplified-for more hours of work that she puts in, she requires more bushels of wheat, even just to survive. Draw a modified version of the diagram above to depict how Anna's biological survival constraint change in this case and also comment with brief reasoning whether Anna would be better off on her altered biological survival constraint compared to before? c) Suppose a new scenario where the Government has introduced a new social welfare program to cater to the poor of the society, wherein the reservation wage increases from 2 bushels of wheat to 6 bushels of wheat. Draw a new diagram to show the impact of this welfare program and comment on who do you think would benefit from this intervention? Additionally, does the outcome of this intervention results in an allocation which is a pareto efficient one? Explain your reasoning.

Question-3 Consider the figure below which shows the combined production function of Anna and Bob: Wheat (bushels) [slope at A slope at Y] Z A Y X Free-time (hours) a) Assume a case where Anna works the land owned by Bob. By referring to the diagram above, explain how does Anna rank the possible allocations marked as X, Y, Z and A? b) Now assume a separate case whereby Anna is a slave to Bob. It is also given that Anna recently suffered from Corona virus and thus her nutrition needs are amplified-for more hours of work that she puts in, she requires more bushels of wheat, even just to survive. Draw a modified version of the diagram above to depict how Anna's biological survival constraint change in this case and also comment with brief reasoning whether Anna would be better off on her altered biological survival constraint compared to before? c) Suppose a new scenario where the Government has introduced a new social welfare program to cater to the poor of the society, wherein the reservation wage increases from 2 bushels of wheat to 6 bushels of wheat. Draw a new diagram to show the impact of this welfare program and comment on who do you think would benefit from this intervention? Additionally, does the outcome of this intervention results in an allocation which is a pareto efficient one? Explain your reasoning.

Principles of Microeconomics
Principles of Microeconomics
7th Edition
ISBN:9781305156050
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter21: The Theory Of Consumer Choice
Section: Chapter Questions
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Question-3 Consider the figure below which shows the combined production function of Anna and Bob: Wheat (bushels) A Free-time (hours) [slope at A = slope at y] a) Assume a case where Anna works the land owned by Bob. By referring to the diagram above, explain how does Anna rank the possible allocations marked as X, Y, Z and A? b) Now assume a separate case whereby Anna is a slave to Bob. It is also given that Anna recently suffered from Corona virus and thus her nutrition needs are amplified- for more hours of work that she puts in, she requires more bushels of wheat, even just to survive. Draw a modified version of the diagram above to depict how Anna's biological survival constraint change in this case and also comment with brief reasoning whether Anna would be better off on her altered biological survival constraint compared to before? c) Suppose a new scenario where the Government has introduced a new social welfare program to cater to the poor of the society, wherein the reservation wage increases from 2 bushels of wheat to 6 bushels of wheat. Draw a new diagram to show the impact of this welfare program and comment on who do you think would benefit from this intervention? Additionally, does the outcome of this intervention results in an allocation which is a pareto efficient one? Explain your reasoning.
Transcribed Image Text:Question-3 Consider the figure below which shows the combined production function of Anna and Bob: Wheat (bushels) A Free-time (hours) [slope at A = slope at y] a) Assume a case where Anna works the land owned by Bob. By referring to the diagram above, explain how does Anna rank the possible allocations marked as X, Y, Z and A? b) Now assume a separate case whereby Anna is a slave to Bob. It is also given that Anna recently suffered from Corona virus and thus her nutrition needs are amplified- for more hours of work that she puts in, she requires more bushels of wheat, even just to survive. Draw a modified version of the diagram above to depict how Anna's biological survival constraint change in this case and also comment with brief reasoning whether Anna would be better off on her altered biological survival constraint compared to before? c) Suppose a new scenario where the Government has introduced a new social welfare program to cater to the poor of the society, wherein the reservation wage increases from 2 bushels of wheat to 6 bushels of wheat. Draw a new diagram to show the impact of this welfare program and comment on who do you think would benefit from this intervention? Additionally, does the outcome of this intervention results in an allocation which is a pareto efficient one? Explain your reasoning.
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