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Two important industries on the island of Bermuda are fishing and tourism. According to data from the World Resources Insti- tute and the Bermuda Department of Statistics, in the year 2000 the 307 registered fishermen in Bermuda caught 286 metric tons of marine fish. And the 3,409 people employed by hotels produced 538,000 hotel stays (measured by the number of visi- tor arrivals). Suppose that this production point is efficient in production. Assume also that the opportunity cost of one addi- tional metric ton of fish is 2,000 hotel stays and that this oppor- tunity cost is constant (the opportunity cost does not change).

a. If all 307 registered fishermen were to be employed by hotels (in addition to the 3,409 people already working in hotels), how many hotel stays could Bermuda produce?

b. If all 3,409 hotel employees were to become fishermen (in addition to the 307 fishermen already working in the fish- ing industry), how many metric tons of fish could Bermuda produce?

c. Draw a production possibility frontier for Bermuda, with fish on the horizontal axis and hotel stays on the vertical axis, and label Bermuda's actual production point for the year 2000.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M91574507

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