Instructions

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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