Q1. Manipulate demand of price elasticity. Suppose that 50 units of a good demanded at a cost of 1 / unit. A reduction in price to $.20 results in an increase in quantity demanded to 70 units. Show that these data yield a price elasticity of $0.25. Explain by what percentage (%) would a 10% rise in the price decrease the quantity demanded also assuming price elasticity remains constant along the demand curve?
Q2. Explain the connections between opportunity cost and the production possibilities frontier?