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6. In Presidentville, only two goods, cigarettes and UBI, are produced. There are two tribes in Presidentville, the Trumps and the Yangs. By themselves, the Trumps each month can produce either 50 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. The Yangs, by themselves, each month can produce 80 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. a) Assume constant opportunity costs for the two PPFS. Draw one diagram showing the monthly PPF for the Trumps and another showing the monthly PPF for the Yangs (on the same graph). On the X-axis, label as cigarettes. On the y-axis, label as UBI b) Which tribe has the comparative advantage in cigarettes? In UBI? (Show work) The Trumps discover a new technique for making cigarettes that doubles the quantity of cigarettes they сan produce eаch month. c) After the innovation, which tribe now has the absolute advantage in producing cigarettes? In producing UBI? d) Which has the comparative advantage in cigarettes? In UBI? (Show work)

6. In Presidentville, only two goods, cigarettes and UBI, are produced. There are two tribes in Presidentville, the Trumps and the Yangs. By themselves, the Trumps each month can produce either 50 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. The Yangs, by themselves, each month can produce 80 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. a) Assume constant opportunity costs for the two PPFS. Draw one diagram showing the monthly PPF for the Trumps and another showing the monthly PPF for the Yangs (on the same graph). On the X-axis, label as cigarettes. On the y-axis, label as UBI b) Which tribe has the comparative advantage in cigarettes? In UBI? (Show work) The Trumps discover a new technique for making cigarettes that doubles the quantity of cigarettes they сan produce eаch month. c) After the innovation, which tribe now has the absolute advantage in producing cigarettes? In producing UBI? d) Which has the comparative advantage in cigarettes? In UBI? (Show work)

Brief Principles of Macroeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
8th Edition
ISBN:9781337091985
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter5: Measuring A Nation's Income
Section: Chapter Questions
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6. In Presidentville, only two goods, cigarettes and UBI, are produced. There are two tribes in Presidentville, the Trumps and the Yangs. By themselves, the Trumps each month can produce either 50 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. The Yangs, by themselves, each month can produce 80 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. a) Assume constant opportunity costs for the two PPFS. Draw one diagram showing the monthly PPF for the Trumps and another showing the monthly PPF for the Yangs (on the same graph). On the X-axis, label as cigarettes. On the y-axis, label as UBI b) Which tribe has the comparative advantage in cigarettes? In UBI? (Show work) The Trumps discover a new technique for making cigarettes that doubles the quantity of cigarettes they сan produce eаch month. c) After the innovation, which tribe now has the absolute advantage in producing cigarettes? In producing UBI? d) Which has the comparative advantage in cigarettes? In UBI? (Show work) WSJ
Transcribed Image Text:6. In Presidentville, only two goods, cigarettes and UBI, are produced. There are two tribes in Presidentville, the Trumps and the Yangs. By themselves, the Trumps each month can produce either 50 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. The Yangs, by themselves, each month can produce 80 cigarettes and no UBI, or 100 UBI and no cigarettes, or any combination in between. a) Assume constant opportunity costs for the two PPFS. Draw one diagram showing the monthly PPF for the Trumps and another showing the monthly PPF for the Yangs (on the same graph). On the X-axis, label as cigarettes. On the y-axis, label as UBI b) Which tribe has the comparative advantage in cigarettes? In UBI? (Show work) The Trumps discover a new technique for making cigarettes that doubles the quantity of cigarettes they сan produce eаch month. c) After the innovation, which tribe now has the absolute advantage in producing cigarettes? In producing UBI? d) Which has the comparative advantage in cigarettes? In UBI? (Show work) WSJ
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