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.

Elucidate

Explain why scarcity exists in this economy. Use the data as evidence of your reasoning.

What is the maximum quantity of guns that can be produced?

What is the maximum quantity of butter than can be produced?

Draw the nation's production possibility curve.

Explain why the nation can't produce both 3 guns and 4 butters.

Explain why the nation shouldn't produce both 1 gun and 2 butters.