Zoolinomics The Economics of Zoo Keeping

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ZoolinomicsThe Economics of Zoo Keeping
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Discussion QuestionDid every animal make it
into your zoo? Why or why not?
Scarcity necessitates choices  Because the
amount of space in the zoo is scarce, choices had
to be made about which animals would bring the
most visitors and highest profits to the
zoo.  If scarcity were not an issue, then of
course we would want all the animals in the world
in our zoo. But given limited land resources,
choices had to be made to maximize the value per
acre of land.
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Discussion QuestionDid you include a turkey or
a cow in your zoo? Why or why not?
Benefits vs. costs Every economic decision
involves both costs and benefits. Even if the
turkeys were free there is still a cost
associated with putting them in our zoo. Each
turkey costs a tenth of an acre, which is land
that we could use for more exotic animals that
would attract more visitors. The benefit of
having a turkey in your zoo does not outweight
the cost, which is the land that could have
been used for exotic animals In economics, a
common saying is, There's no such thing as a
free turkey (or lunch, whatever...)
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Discussion QuestionWhy didn't you have a zoo
with only monkeys?
Diminishing marginal utility Let's admit it,
everyone loves monkeys. But there can be too much
of a good thing. In economics we recognize that
the more a person consumes of a particular good
or service, the less each additional unit is
worth to him. In other words, while a few monkeys
might please our visitors, not many people would
be willing to pay to get into a zoo with 50
monkeys and nothing else. The law of diminishing
marginal utility is a basic economic concept that
says that the more a consumer has of a particular
product, the less each additional unit is worth.
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Discussion QuestionWhich type of elephant did
you choose? Why did you choose the type you did
and not the other?
Benefits vs. Costs, again... Just like with the
turkey, except this time elephants are exotic and
do attract visitors. So when deciding whether to
include Asian or African elephants, we had to
weigh the cost and the benefit of each.  An
Asian elephant only costs us one acre, while and
African elephant costs us three acres. For each
acre we allocate for elephants, we'll be able to
provide much more satisfaction to our visitors by
choosing Asian elephants, because we have to give
up less of our scarce land resources for each
Asian elephant than for the African elephant.
Asian elephants are cheaper in this regard.
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Discussion QuestionWhat was the last animal
to make the cut for your zoo?
Marginal analysis Economic decisions
are marginal decisions. When deciding what to do
after school, you weight the benefits and the
costs of each additional hour you spend doing
something. For example, you may play Xbox for two
hours, then decide to study for an hour. At the
end of two hours, you weighed the marginal
benefit of an additional hour of gaming with the
marginal cost (which in this case is the study
time you'd miss out on).  In your zoo, you
probably first selected the animals you thought
would create the most marginal benefit, added
more of them until you thought the additional
benefit of one more was low enough, then added a
different animal. The last animal to make the cut
represents the animal with the lowest marginal
benefit, yet it is still higher than you thought
the marginal benefit would have been for the
animals that did not make the cut. 
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Discussion QuestionWhat was the animal that
just missed the cut for your zoo?    
Opportunity cost The opportunity cost is the
opportunity lost. The opportunity cost of the
last animal you put in the zoo is the benefit you
could have enjoyed from choosing some other
animal.   Say you added a seal last, but if you
had just a little more space you would have added
a kangaroo too. The cost of the seal is the
kangaroo you could have chosen instead. Opportuni
ty cost of anything is what you give up to have
it. The opportunity cost of studying economics
for two years is the benefit you could have
earned from studying a different subject instead.
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Discussion QuestionDid everyone in your group
agree to include the same animals?Would
everyone in your group have made the same choices
if they had built the zoo alone?
Social benefits versus individual benefits Not
everyone has the same preferences. Some members
of your group may really love turkeys, yet had to
sacrifice this preference to satisfy the desires
of the group. What's best for the individual is
not always best for society.  In economics
terms, the private benefit of certain behaviours
sometimes differs from the social benefit. This
may lead to what are known as market failures in
economics, which arise when the private behavior
of individual consumers or producers leads to
socially undesirable outcomes. Second hand smoke,
air pollution, traffic, and even global warming
are examples of such market failures.