Table 1 shows the amount of water used each day by two departments in a textile firm. The firm has a fixed daily water supply of 1200 litres. Department Wat...

Assessment: Economics 9214 | Paper 1 Mock 01 | Written Paper 1 Subject: Economics - 9214

Question 1 Report

Table 1 shows the amount of water used each day by two departments in a textile firm. The firm has a fixed daily water supply of 1200 litres.

DepartmentWater used per day, litresValue of output per litre, $
Dyeing7008
Finishing50012

(a) Which department should receive extra water if the firm aims to maximise revenue? [1]
(b) Explain the reason for your answer. [1]

Answer Details

(a) The finishing department should receive extra water if the aim is to maximise revenue. [1]

(b) Each litre of water used in finishing produces output worth $12, compared with $8 per litre in dyeing. Allocating an additional scarce litre to finishing therefore generates the higher value of output. [1]

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