Zaid can produce either tables or chairs. Zaid can work up to 10 hours a day. His production possibilities are given in the table below:
|
Tables |
Chairs |
|
0 |
100 |
|
10 |
80 |
|
20 |
60 |
|
30 |
40 |
|
40 |
20 |
|
50 |
0 |
- Construct the production possibilities frontier (PPF) for Zaid. Put tables on the Horizontal axis and chairs on the vertical axis.
- What is Zaid’s opportunity cost of producing one additional table?
- Currently Zaid is producing 20 tables and 40 chairs.
- Is this allocation of resources efficient? Why?
- Show this allocation on the graph and advise Zaid how he can be more efficient.
Question- 2 Marks-2
Suppose the market for Computer is given by the following equations for supply and demand:
Qd= 3300−2P
Qs= 500+8P
- Calculate the equilibrium price and quantity.
- Sketch the supply and demand curves on a graph indicating the equilibrium quantity and price.
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