ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:4. A zoo cannot have everything it wants. It has to make choices. The zoo committeehas decidea
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 below to graph & label a Production Possibilities curve on the grid below
Popcorn or Cotton Candy
Popcorn,
Cotton Candy
Popcorn
10
1
9
2.
4
4
Cotton Candy
b. Next, label a point of underutilization (inefficiency). Call it Point A, Next, label apoint 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/opportunity cost)? 10 -9 = ?
d. What is the marginal/opportunity cost of 3 popcorn stands?
e. What is the marginal/opportunity cost of 4 popcorn stands?
Page 4 of 2
Transcribed Image Text:Date:
Good X
Good Y
5. Plot the following combinations of good X and good Y on the
graph below.Plot all points and connect them with a smooth
37
34
30
28
20
10
10
17
20
29
curve.
Good Y
36
40
oducto ce
Good X
Answer the following questions:
a. Calculate the cost of increasing production of good X from 0 to 10 units, asmeasured
in the amount of good Y that would need to be sacrificed.
b. Calculate the cost of increasing production of good X from 10 to 20 units, asmeasured
in the amount of good Y that would need to be sacrificed.
c. Calculate the cost of increasing production of good X from 20 to 30 units, asmeasured
in the amount of good Y that would need to be sacrificed.
d. What happens to the opportunity cost as the production of good X increases?
Page 5 of 2
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How do you find the marginal costs (questions d and e)
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