Question 2: (10 Marks)

Canada's Wonderland (CW) cannot have everything it wants. It has to make choices. The CW committee has decided that it can have several concession stands. It has to decide how many fruit drink stands and how many stuffed toy stands to have scattered around CW. 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.

Concession Stands
Fruit Drinks	Stuffed Toys
0	13
1	12
2	10
3	6
4	0

.a. Use the table and graph a Production

Possibilities curve on the graph below (2 Marks):

.b. Next, label a point of underutilization (inefficiency) for Fruit Drinks and Stuffed Toys above.

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. (2 Marks)

. c. Look at the table: To get one Fruit Drink stand, how many Stuffed Toy stands have to be given up (marginal cost)? (2 Marks)

. d. What is the marginal cost of 3 Fruit Drink stands? (2 Marks)

. e. What is the marginal cost of 4 Fruit Drink stands? (2 Marks)