I need help with a Micro Economics question. All explanations and answers will be used to help me learn.
Question-1
Bill can produce either tables or chairs. Bill can work up to 10 hours a day. His production possibilities are given in the table below:
Tables
Chairs
0
200
50
180
60
160
70
140
80
120
90
0
- Explain production possibilities frontier (PPF) by putting tables on the Horizontal axis and chairs on the vertical axis. What is Bill’s opportunity cost of producing one additional table?
- Currently Bill is producing 70 tables and 120 chairs.
- Is this allocation of resources efficient? Why?
- Show this allocation on the graph and advise Bill how he can be more efficient.
Question-2
Explain by applying these concepts with examples.
- Rational people respond to incentives
- Role of prices in allocating resources
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