1. Which method is used to allocate the following scarce resources?

• Campus parking space between student areas and faculty areas

• A spot in a restricted student parking area

• Textbooks

• Host city for the Olympic Games

2. What is the marginal benefit from bananas when 1 pound of bananas is grown? What is the marginal cost of growing 1 pound of bananas?

 

3. On Figure 1, mark two points: Point A at which production is efficient but too much coffee is produced for allocative efficiency; and point B, the point of allocative efficiency.

Transcribed Image Text:

TABLE 1 MARGINAL BENEFIT AND MARGINAL COST Bananas (pounds of coffee per pound (pounds) of bananas) 123 Willing to Must give give up up 2 3 2 1 123 3