The university produces two commodities: research and teaching. The resources the university uses include faculty and staff, libraries, classrooms and so on. The following points indicate some points on the Universities PPF:
A
B
C
D
E
F
G
Research
900
750
600
450
300
150
0
Teaching
0
20
45
75
110
150
200
a) Does research production by the university exhibit increasing, constant or decreasing per unit opportunity cost?
b) Graph the university’s PPF (assuming that straight line segments connect the points specified above). Indicate which areas of the graph correspond to unattainable production points, production points that make most effective use of the university’s resources and points where there are unemployed resources.
2
c) Supposing the university is at point B but would like to alter production to point C. What would be the per teaching unit opportunity cost of producing the extra teaching unit?
d) What will happen to the PPF if the university resources are reduced to half?