A zoo cannot have everything it wants. It has to make choices. The zoo committee has decided that it can have several concession stands. It has to decide how many popcorn stands and how many cotton candy stands to have scattered around the zoo. The committee made up a table of the different combinations depending upon what the committee has determined to be the cost of each stand. Now the committee has to decide what combination is right.

A. Use the table and graph a Production

Possibilities curve on the graph below:

b. Next, label a point of underutilization (inefficiency). Call it Point A, Next, label a point of efficiency. Call it Point B. Last, label a point that is now unattainable. Call it Point C.

c. Look at the table: To get one popcorn stand, how many cotton candy stands have to be given up (marginal cost)? 10 - 9 = ?

d. What is the marginal cost of 3 popcorn stands?

e. What is the marginal cost of 4 popcorn stands?