Discussion:
Any answer without clear and precise explanation will not receive any credit.
1.Betty can make either "120 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 960 boxes of chocolates" or a combination of wine and chocolates. For parts (a) through (c) of this question assume that Betty's Production Possibility Frontier (PPF) reflects the property of constant opportunity costs.
a.Draw Betty's PPF.
b.Find Betty's opportunity cost of a bottle of wine in terms of box (es) of chocolates.
2.Suppose Betty takes a course called WINE 103. After the semester is over she realizes that she can now make either "288 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 960 boxes of chocolates" or a combination of wine and chocolates. Find Betty's new opportunity cost of a box of chocolate in terms of bottle(s) of wine.
3.Find the equilibrium price, quantity and revenue in a market characterized by the following information: ?
Demand: Qd = 500 - 2P Supply: Qs = 3P