The island of Yoko has 300 residents who can work in only one of two economic activities – fishing or tourism. Last year 30 residents worked as fishermen in Yoko and caught 40 tons of fish in total. The other 270 residents in Yoko were employed by tourist hotels and they produced 5,000 hotel stays in all (measured as the number of tourist visits). Suppose that this production point is efficient. Assume that the opportunity cost of one additional ton of fish is 200 hotel stays and that this opportunity cost is constant (i.e. the production possibility frontier is a straight line).
If the 30 fishermen were to be employed by hotels instead (in addition to the 270 people already working in hotels), how many total hotel stays could Yoko have produced last year (i.e. when all 300 residents are employed by tourist hotels)?
If all 270 hotel employees were to become fishermen instead (in addition to the? 30 fishermen already working in the fishing industry), how many total tons of fish could Yoko have produced last year?
Draw a production possibility frontier for Yoko in the graph below, and label Yoko’s actual production point from last year.