Problem 1. Can you please define opportunity cost? With the aid of a carefully labelled production possibility curve, could you illustrate the concept of increasing oportunity cost. Why does opportunity cost increase?
Problem 2:
a. What is the difference between elastic and inelastic demand. Please be precise.
b. If a restaurant increases its price of coffee from $ 1.00 to $ 1.20 and quantity demanded falls from 100 cups to 80 cups. How can I compute the price elasticity of demand?