Economics

 
As a CEO of a nonprofit agency that provides services for children in crisis, you are developing a model to determine the “optimal” bundle of services you can provide based on $4,000 provided by one of your biggest philanthropist. However, she has asked that you spend the money on clothes or shelter to children in need. You learn that the price of shelter (e.g. bed) (Y axis) will cost $10 per bed and a warm winter coat (X axis) will cost you $20 per coat. Based on your experience, you would be willing to purchase 200 beds, which you feel should accommodate the children in your community in need. Use an indifference-curve and budget constraint diagrams to illustrate the optimal consumption bundle. Be sure to label your diagram and explain your answer as completely as possible. Please explain your answers based on the appropriate school of political economic thought.

Using a production possibilities curve, explain (using narrative and graphs) the opportunity cost principle. Please provide a “real-world” example where this principle would be applied in the public/healthcare/nonprofit sector.