Macroeconomics Problem Set #1 Guns or Butter? Suppose a nation has a total of 12 units of labor: which can be used to produce either guns or butter. One gun takes 6 units of labor to produce and 1 butter takes 2 units of labor to produce. I Explain why scarcity exists in this economy. Use the data as evidence of your reasoning. I 1What is the maximum quantity of guns that can be produced? I 1What is the maximum quantity of butter than can he produced? I Draw the nation's production possibility curve. I 1What is the opportunity cost of guns in this nation? I Explain why the nation can't produce both 3 guns and 4 butters. I Explain why the nation shouldn't produce both 1 gun and 2 butters