Pete's a kid and his weekly allowance is $10. He spends his entire allowance between gummi bears and chocolate.
A price of a pound of gummi bears (GB) is $2.50 and the price of a pound of chocolate is $5
A) Graph Pete's consumption possibilities curve (between the amount of gummi bears and chocolate). PLACE GUMMI BEARS ON THE X AXIS
B) Can Pete buy the following combinations of gummi bears (GB) and chocolate (C)?
i) 1.5 pounds of GB and pounds of 1.5C
ii) 2 pounds of GB and pounds of 1C
iii) 3 pounds of GB and pounds of 0.75C
C) What is the opportunity cost of Pete's:
i) first pound of gummi bears
ii) second pound gummi bears
iii) last pound of gummi bears
D) How is Pete's opportunity cost of gummi bears shown in the graph you drew in part A?