Who has a comparative advantage in the pro-duction of street tacos?
Alexi 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. 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.
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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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