Unformatted text preview: gm Draw a production possibilities frontier for guns and butter. Suppose that
both of these goods are subject to increasing marginal opportunity costs in
production, and be sure that your graph reﬂects this fact. Now suppose that a new and innovative technology enhances the production butter, but does not
affect the production of guns. Show how this new innovation changes the ppf. Practice Problems: Suppose the first three columns in the following table illustrate the maximum
quantities of smoothies or salads that two brothers could make in a day’s time.
Fill in the rest of the table and answer the questions below. # Salads # Smoothies Opportunity Opportunity Cost
er da er da Cost of Salad ofLSmoothie‘ Who has a comparative advantage in producing salads? -- ML
Who has a comparative advantage in producing smoothies? ?— Solo
Who has an absolute advantage in producing salads? «— “do Who has an absolute advantage in producing smoothies? .. (Ye/b 12 ...
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- Fall '08