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:

TablesChairs
0100
1080
2060
3040
4020
500
  • 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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