Question

Question: Betty can make either "40 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 160 boxes of chocolates" or a combination of wine and chocolates. For each of the parts (a) through (c) of this question assume that Betty's Production Possibility Frontier (PPF) reflects the property of constant opportunity costs.

a. Draw and explain Betty's PPF

b. Find Betty's opportunity cost of a bottle of wine in terms of box(es) of chocolates.

c. Suppose Betty takes a course called CHOCOLATE 103. After the semester is over she realizes that she can now make either "40 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 200 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.

Please use clear hand writing and explain your answers clearly. Also, explain the PPF graph .

Answer 1