economic questions?

Question

In the ancient country of Roma, only two goods, spaghetti and meatballs, are produced. There are two tribes in Roma, the Tivoli and the Frivoli. By themselves, the Tivoli each month can produce either 30 pounds of spaghetti and no meatballs, or 50 pounds of meatballs and no spaghetti, or any combination in between. The Frivoli, by themselves, each month can produce 40 pounds of spaghetti and no meatballs, or 30 pounds of meatballs and no spaghetti, or any combination in between.

In A.D. 100 the Frivoli discover a new technique for making meatballs that doubles the quantity of meatballs they can produce each month.

Draw the new monthly production possibility frontier for the Frivoli. please explain how this graph looks.

After the innovation, which tribe now has the absolute advantage in producing meatballs? In producing spaghetti? Which has the comparative advantage in meatball production? In spaghetti production?

Answer 1

Here is a link to an image of a production possibility frontier. Just put Spaghetti and meatballs on the x and Y axis and intercepting at 60 meatballs and 40 spaghetti. Plot a couple more coordinates using that ratio (2m, 37s & 4m, 34s & 6 m, 31 s) then connect them up in a curve.

Absolute advantage Meatballs and Spaghetti - Frivloi - they produce more of either.

Comparative advantage spaghetti - Frivoli - They produce them at the cost of 1.5 Meatballs verses Tivoli's cost of 1.66 Meatballs.

Comparative advantage Meatballs - Tivoli - they produce them at the cost of 0.6 spaghetti, verses the cost of 0.66 spaghetti for Frivoli.