Table 1 shows how a small island allocated its 120 available workers between fishing and producing solar panels during one month. The government is consider...
Question 1 Report
Table 1 shows how a small island allocated its 120 available workers between fishing and producing solar panels during one month. The government is considering which output should increase.
(a) State the maximum number of solar panels that could be produced if no workers were allocated to fishing. [1]
(b) Calculate the opportunity cost of increasing solar-panel output from 40 to 70 panels. Show your working. [2]
(c) Explain one reason why the opportunity cost may increase as the island produces more solar panels. [3]
Answer Details
(a) If no workers are allocated to fishing, the maximum output is 110 solar panels. [1]
(b) Increasing solar-panel output from 40 to 70 changes fishing output from 70 tonnes to 55 tonnes:
\[\text{Opportunity cost}=70-55=15\text{ tonnes of fish}\]
The opportunity cost is 15 tonnes of fish. [2]
(c) Workers and boats may be better suited to fishing than to producing solar panels. [1] As more resources are transferred into panel production, increasingly suitable fishing resources must be moved. [1] Each further increase in solar-panel output then sacrifices a larger amount of fish, so opportunity cost increases. [1]
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