Unformatted text preview: (Remember we assume Henry can buy arbitrarily small fractions of either good.) (5 pts) Q.2 – Gilligan and the Skipper each own half of an island. Gilligan can grow 1 mango or 4 bananas on his half, while the Skipper can grow 4 mangos or 1 banana on his half. a) Draw the PPF of the island. Label the intercepts. (5 pts) b) Suppose they can sell their fruit to the outside world and the price of a banana is $1, and their goal is to make as much money as possible. What is the range of mango prices for which they will produce 4 mangos and 4 bananas? Write this down below, and try to show the range on the graph above as well. (10 pts) c) Is it possible for mangos to become sufficiently expensive such that they produce zero bananas? Why/why not? (Remember we assume they can produce arbitrarily small fractions of either good.) (5 pts) Bananas Mangos...
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- Summer '11
- Microeconomics, Henry, donuts