Choices and Scarcity
Economic Terms
Calculations
IRL
100
This is the main reason Keisha can’t buy both KFC and a fish-fry plate with her $30 on Bay Street
What is scarcity?
100
Opportunity Cost
The true economic cost of any decision, defined as the value of the most highly valued alternative foregone
100
A small Family Island can produce the following using all its workers and boats:
Calculate the opportunity cost of increasing tourism from 60 to 80 boat trips
20 Crates
100
The number-one industry that uses our beaches, sea, and sunshine to bring in foreign dollars
What is Tourism?
200
Food and water are “needs”; the newest iPhone and Junkanoo costume are examples of these
What are wants?
200
Economic Growth
An outward (rightward and upward) shift of the entire PPF caused by increases in factor quantity/quality, capital accumulation, or technological advancement
200
The Bahamas can produce:
The country is currently producing 100 thousand visitors and 150 tons of fish. The government wants to increase tourism to 150 thousand visitors.
Calculate the opportunity cost in tons of fish for each extra 50 thousand visitors from 100 thousand to 150 thousand.
50 Tons
200
The famous Nassau market where you can see all four factors of production working together every day
What is the Straw Market
300
The three big questions every country, including The Bahamas, must answer because of scarcity
What are “What to produce?, How to produce?, For whom to produce?”
300
Production Possibility Frontier
A concave (bowed-out) curve depicting the maximum attainable output combinations of two goods/services when all resources are fully and efficiently utilised.
300
Use this straight-line PPC (constant opportunity cost):
Maximum tourism = 240 thousand visitors Maximum fishing = 120 tons
Write the equation that links tourism and fishing.
Fish = 120 – 0.5 × Tourism
300
The Bahamian beer that shows successful local branding
What is Kalik?
400
When you choose conch fritters, this is what you give up if you could have had johnnycake instead.
What is opportunity cost?
400
Law of Increasing Opportunity Cost
The principle that explains the concave shape of the PPF: as production of one good.
400
The Bahamas discovers a new fish-finding sonar. Old PPC (before sonar):
- 0 tourists → 160 tons fish
- 200 thousand tourists → 0 tons fish
New PPC (after sonar):
- 0 tourists → 240 tons fish
- 200 thousand tourists → 0 tons fish (tourism unchanged)
- What type of shift is this called? (one word)
Biased (or fishing-biased) outward shift
400
After Hurricane Dorian, rebuilding hotels and training more tour guides caused this change to the PPC
What is an outward shift?
500
The type of economy The Bahamas actually has (not pure government, not pure private)
What is a mixed economy?
500
Productive Efficiency
A situation achieved only when the economy operates on its PPF, producing the maximum possible output from given resources
500
A curved PPC for Exuma shows these exact points:
UPDATED QUESTION 5 – Very Hard (12 marks)
(No table – pure calculation and reasoning, just like the real BGCSE Paper 1 & 2)
Question 5 – Very Hard (12 marks) Exuma’s current Production Possibility Curve is bowed outward (curved). Using all its resources and current technology, Exuma discovers the following exact points are possible:
- If it produces 0 thousand tourists, it can catch 100 tons of fish.
- If it produces 20 thousand tourists, it can catch 95 tons of fish.
- If it produces 40 thousand tourists, it can catch 85 tons of fish.
- If it produces 60 thousand tourists, it can catch 65 tons of fish.
- If it produces 80 thousand tourists, it can catch 35 tons of fish.
- If it produces 100 thousand tourists, it can catch 0 tons of fish.
Exuma is currently producing exactly on its curve at 40 thousand tourists and 85 tons of fish.
Calculate the opportunity cost in tons of fish of increasing tourism from 80 thousand to 100 thousand tourists.
From 80 → 100 thousand tourists: fish falls from 35 → 0 tons Opportunity cost = 35 tons of fish (3 marks)
500
The factor of production The Bahamas has plenty of that Japan has almost none of (making our economies very different)
What is Land (natural resources)?