lexi and Tony own a food truck that serves only two items, street tacos and Cuban sandwiches. As shown in the table, Alexi can make 80 street tacos per hour but only 20 Cuban sandwiches. Tony is a bit faster and can make 100 street tacos or 30 Cuban sandwiches in an hour. Alexi and Tony can sell all the street tacos and Cuban sandwiches that they are able to produce. Output Per Hour Street Tacos Cuban Sandwiches Alexi 80 20 Tony 100 30 a. For Alexi and for Tony, what is the opportunity cost of a street taco? Who has a comparative advantage in the pro- duction of street tacos? Explain your answer. b. Who has a comparative advantage in the production of Cuban sandwiches? Explain your answer. c. Assume that Alexi works 20 hours per week in the business. Assuming Alexi is in business on his own, graph the possible combinations of street tacos and Cuban sandwiches that he could produce in a week. Do the same for Tony.
lexi and Tony own a food truck that serves only two
items, street tacos and Cuban sandwiches. As shown
in the table, Alexi can make 80 street tacos per hour
but only 20 Cuban sandwiches. Tony is a bit faster and
can make 100 street tacos or 30 Cuban sandwiches in
an hour. Alexi and Tony can sell all the street tacos and
Cuban sandwiches that they are able to produce.
Output Per Hour
Street Tacos Cuban Sandwiches
Alexi 80 20
Tony 100 30
a. For Alexi and for Tony, what is the
street taco? Who has a
duction of street tacos? Explain your answer.
b. Who has a comparative advantage in the production of
Cuban sandwiches? Explain your answer.
c. Assume that Alexi works 20 hours per week in the
business. Assuming Alexi is in business on his own, graph
the possible combinations of street tacos and Cuban
sandwiches that he could produce in a week. Do the same
for Tony.
d. If Alexi devoted half of his time (10 out of 20 hours) to
making street tacos and half of his time to making Cuban
sandwiches, how many of each would he produce in a
week? If Tony did the same, how many of each would he
produce? How many street tacos and Cuban sandwiches
would be produced in total?
e. Suppose that Alexi spent all 20 hours of his time on street
tacos and Tony spent 17 hours on Cuban Sandwiches and
3 hours on street tacos. How many of each item would be
produced?
f. Suppose that Alexi and Tony can sell all their street tacos
for $2 each and all their Cuban Sandwiches for $7.25 each.
If each of them worked 20 hours per week, how should
they split their time between the production of street
tacos and Cuban sandwiches? What is their maximum
joint revenue?
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