Paul can make either “100 bottles of wine and 0 boxes of chocolates” or “0 bottl
ID: 1230792 • Letter: P
Question
Paul can make either “100 bottles of wine and 0 boxes of chocolates” or “0 bottles of wine and 1600 boxes of chocolates” or a combination of wine and chocolates. For parts of this question assume that Paul’s PPF reflects the property of constant opportunity costs.
Suppose PAUL takes a course called CHOCOLATES 103. After the semester is over he realizes that he can now make either “100 bottles of wine and 0 boxes of chocolates” or “0 bottles of wine and 2000 boxes of chocolates” or a combination of wine and chocolates. Find PAUL's new opportunity cost of a bottle of wine in terms of box(es) of chocolates.
Explanation / Answer
100wine=2000choc we want to know how much wine would Paul be willing to give up for 1 box of choc choc=100wine/2000 so 1 box of chocolate for 1/20 bottle of wine is pauls opportunity cost