1) the following statement true or false?
The Principle of Comparative Advantage is based on the concept of Opportunity Cost.
2) Is the following statement true or false?
A market equilibrium is not characterized by excess demand or excess supply.
3) Question. Betty can make either “120 bottles of wine and 0 boxes of chocolates” or “0 bottles of wine and 960 boxes of chocolates” or a combination of wine and chocolates. For parts (a) through (c) of this question assume that Betty’s Production Possibility Frontier (PPF) reflects the property of constant opportunity costs.
a. [5 points] Draw Betty’s PPF.
b. [5 points] Find Betty’s opportunity cost of a bottle of wine in terms of box(es) of chocolates.
c. [10 points] Suppose Betty takes a course called WINE 103. After the semester is over she realizes that she can now make either “288 bottles of wine and 0 boxes of chocolates” or “O bottles of wine and 960 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.
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