1.In the movie “Cast Away”, Tom Hanks plays aFedEx efficiency expert stranded on

Question

1.In the movie “Cast Away”, Tom Hanks plays aFedEx efficiency expert stranded on a deserted island. While on theisland, he divides his time between catching fish, gatheringcoconuts, painting, and building a raft. Suppose that these wereMr. Hanks’ only activities. Did he face an opportunity costfrom pursuing any of these activities? Why or why not?

2.What does it mean a “free lunch” is available? Relateyour answer to the production possibilities frontier.
1.In the movie “Cast Away”, Tom Hanks plays aFedEx efficiency expert stranded on a deserted island. While on theisland, he divides his time between catching fish, gatheringcoconuts, painting, and building a raft. Suppose that these wereMr. Hanks’ only activities. Did he face an opportunity costfrom pursuing any of these activities? Why or why not?

2.What does it mean a “free lunch” is available? Relateyour answer to the production possibilities frontier.

Explanation / Answer

1. There are two ways he could have faced an opportunity cost. Thefirst is by not pursuing any other activities that he could havebeen able to do, such as sunbathing. The other is the opportunitycost of not pursuing the other activities more. For example, if hespends 1 hour catching fish, he incurs an opportunity cost of notcatching coconuts, painting, or continuing the construction of hisraft. 2. In relation to the PPF, this is a point inside the frontier,because you can increase production of good X or Y without havingto reduce either. So if you have a PPF X^2 + Y^2 = 64, but X and Yare 4 and 6, plugging this back in to the PPF equation gets you 52.(4^2 + 6^2 = 52) This means you can increase X and Y or acombination until X^2 + Y^2 = 64 without having to give up X orY.

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