Economics Homework Help

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:(3 Marks)

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.(2 Marks)

• Rational people respond to incentives
• Role of prices in allocating resources