Two large international holiday companies have been planning to build hotel and leisure facilities for tourists on one of the island's beaches, which is also a popular day-trip destination for local families. The government tourism minister is keen to encourage these new developments in order to 'make best use of our resources'. He also believes that if the hotel companies take their money elsewhere, this could lead to a loss of tourists coming to Country Y.
1. Discuss what is meant by 'our resources' in this instance.
2. Discuss the minister's view that more hotels will 'make best use of our resources'.
3. Illustrate two possible opportunity costs to the island of a decision in favor of the hotel developments.
4. Evaluate whether increased tourism may be the best use of the island's resources in the long term by using the concept of scarce resources and opportunity cost.