1. Betty can make either "3 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 48 boxes of chocolates" or a combination of wine and chocolates. To answer 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.
c. Suppose Betty takes a course called WINE 103. After the semester is over she realizes that she can now make either "12 bottles of wine and 0 boxes of chocolates" or "0 bottles of wine and 48 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.
2. Find the equilibrium price (P), quantity (Q), and revenue in a market characterized by the following equations:
Q = 200 - 5P [demand]
Q = 5P [supply]
3. The owner of a soccer team and local stadium has commissioned a study that showed the demand by fans for stadium seats (per playing date) to be
P = 22 - 0.2Q
where P is the price of a ticket and Q represents the number of seats (expressed in thousands).
The local stadium seats a maximum of 50,000 per game. Assume that all seats are identical. The current price has been set at $10 per ticket. How much revenue does the owner make at this current price?