MANCOSA H.C.S.C.M Module 5 Basic Economics and Finance (BEF 5) Short Essay 6 Case Study 05/05/2021Questions:1.) Construct a production possibility frontier using the above information, showing what Thami’s earnings will be per week as he devotes, initially zero days a week, then one day a week, then two, then three, four and finally five days a week to the bakery business. Assume a five-day week. (6)2.) Identify and define the economic concept displayed by the shape of the curve shown in 1] and discuss the reasons for this in Thami’s case and whether this is a realistic assumption. (6)3.) Discuss a factor that could cause an outward shift/swivel of the curve drawn in 1] and illustrate it on the diagram. (5)4.) Discuss a factor that could cause an inward swivel/shift of the diagram drawn in 1]. (3) TABLE OF CONTENTS PGNUMBER Question 1 …………………………………………… Question 2 …………………………………………… Question 3 …………………………………………… Question 4 …………………………………………… Bibliography/Reference List ……………………………… Question Answers Question 1: To construct a production possibility frontier (PPF) for Thami’s Bakery business the following points need to be considered. Expected Revenue as he devotes more and more time to the business is R3 000 per day. Current Gross earnings as an accountant is R2 777 per day. Based on an average of a 22 working day month it will be R2 777 x 22 = R61 094 per month. Based on an average 5-day week Thami earns R2 777 p/d x 5 days = R13 885 per week. Dividing a 5-day week by Thami’s daily earnings as an Accountant and a Baker: = R2 777 / 5 days = R555,4 per day = R3 000 / 5 days = R600 per day = R2 777 / 4 days = R694,25 per day = R3 000 / 4 days = R750 per day = R2 777 / 3 days = R925,66 per day = R3 000 / 3 days = R1 000 per day = R2 777 / 2 days = R1388,50 per day = R3 000 / 2 days = R1 500 per day = R2777 / 1 day = R2 777 per day = R3 000 / 1 day = R3 000 per day Multiplying a 5-day week by Thami’s daily earnings as an Accountant and a Baker: = R2 777 x 5 days = R13 885 per week = R3 000 x 5 days = R15 000 per week= R2 777 x 4 days = R11 108 per week = R3 000 x 4 days = R12 000 per week= R2 777 x 3 days = R8 331 per week = R3 000 x 3 days = R9 000 per week= R2 777 x 2 days = R5 554 per week = R3 000 x 2 days = R6 000 per week= R2 777 x 1 day = R2 777 per week = R3 000 x 1 day = R3 000 per week
