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1. Suppose you have a job that allows you to spend up to 40 hours per week at work. If you work 40 hours per week, however, you have no time for studying but your standard of living is much higher. If you study for 40 hours per week, you have no time to go to work but you receive much better grades. Draw a production possibilities frontier (PPF) that represents this situation. Use this curve to explain:
2. Suppose that the market for Australian red wine is in equilibrium. Explain how the situation would be affected if medical research discovered that drinking red wine regularly significantly lowered the risk of developing heart disease. How might the situation change again if new technology reduced the cost of producing Australian wine?
3. Suppose your neighbours across the street want you to help them tend the flower garden in the front of their house.
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