1. Consider Zia who has a spending allowance of $100. She is contemplating buying DVDs and blouses. Assume DVDs cost $10 and blouses cost $20. a. Draw a budget constraint that is similar to Figure 2.2. Put DVDs on the vertical axis and blouses on the horizontal axis. b. If Zia buys three blouses, how many DVDs can she afford to buy? 4 DVDs c. If Zia buys six DVDs, how many blouses can she buy? 2 Blouses 2. Again referring to Zia, she just got a new job and now her spending allowance increased to $200. Again, assume DVDs cost $10 and blouses cost $20. a. When drawing the new budget constraint, did it shift to the left or to the right? Right b. If Zia buys three blouses, how many DVDs can see buy now? 14 DVDs c. If Zia buys six DVDs, how many blouses can she buy now? 7 Blouses 3. Review the table below and draw a PPF and then answer questions about it. This production table takes place in North Cox where they are producing beer and mountain bikes. Production Point Mountain Bikes Beer A 0 100 B 30 90 C 50 70 D 60 40 65 0 a. Is this a straight-line PPF or a curved PPF? Based on your answer, what implications would this have on the production of mountain bikes and beer? Curved b. The economic developers of North Cox believe there is a more of a market for beer than mountain bikes. If that is the case, provide a potential production point that would be allocation efficient for this community. Correct their is more potiental in the beer marker then bikes