Question

Question One Jane and John are a new couple trying to make a future production plan together. Assume there exist two types of production they can conduct: Household Production (HP) and

Market Production (MP). If Jane does household production, her production value is \$20 per hour; if she does market production, her production value is \$10 per hour. If John does household production, his production value is \$10 per hour; if he does market production, his production value is \$20 per hour. Both Jane and John can work 8 hours on workdays. a) Calculate Jane and John's possible production frontiers (PPFs) on a workday and draw them in two diagrams. b) Combine Jane and John's PPFs in the same diagram. If both of them conduct market production, only, what would be their combined PPF? Show it in the diagram. If they do wish to keep some household production, who should do it? Show this new PPF in the diagram. Is there a limitation on this new PPF? c) On the other hand, if both Jane and John conduct household production, only, what would be their combined PPF? Show it in a diagram. If they do wish to keep some market production, who should do it? Show this new PPF in the diagram. Is there a limitation on this new PPF? d) If Jane and John "pool" their production possibilities together and split these possibilities equally between household production and market production, what would be their new PPFs? Show them in a diagram. e) Is there a gain for Jane and John to collaborate? If so, show it in a diagram.