Econ101-project

  • This assignment is an individual assignment.
  • Due date for Assignment 1 is 28/02/2022
  • The Assignment must be submitted only in WORD format via allocated folder.
  • Assignments submitted through email will not be accepted.
  • Students are advised to make their work clear and well presented, marks may be reduced for poor presentation. This includes filling your information on the cover page.
  • Students must mention question number clearly in their answer.
  • Late submission will NOT be accepted.
  • Avoid plagiarism, the work should be in your own words, copying from students or other resources without proper referencing will result in ZERO marks. No exceptions.
  • All answered must be typed using Times New Roman (size 12, double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism).

Submissions without this cover page will NOT be accepted.

 

 

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 140 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

Question-3

The table below shows the marginal benefit that Khaled earns from keeping his store open one more hour. Khaled has a marginal cost of $40 per hour. Khaled stays open 20 hours. (3 Marks)

Hours Marginal Benefit Per Hour
20 200
21 140
22 110
23 70
24 40
25 10
26 0
  • Do you think Khaled’s decision to stay open 20 hours is optimal? Why?
  • How many hours do you advise Khaled to stay open? Why?

Question-4

Suppose the market for Computer is given by the following equations for supply and demand:

(2 Marks)

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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