Rivermoor Meals Ltd supplies ready meals to supermarkets and community centres. Its factory is at full capacity, so it must choose between Option M and Option N for the next year. Table 1 shows the two options.
| Weekly production and resources | Option M | Option N |
|---|---|---|
| Standard meals | 45,000 | 30,000 |
| Premium meals | 10,000 | 20,000 |
| Production workers | 120 | 100 |
| Automated packing lines | 2 | 4 |
[ITEM A] Rivermoor has supplied affordable standard meals for twelve years. Several community centres use them for low-cost lunches. Their coordinators say fewer standard meals would mean that some households must choose a more expensive alternative or go without a prepared lunch. Workers at the factory prefer Option M because it keeps all 120 production jobs.
[ITEM B] A recent consumer survey found growing interest in premium meals using unusual ingredients. Two supermarkets report waiting lists for Rivermoor's premium range. Rivermoor's managers believe Option N would respond to these changing wants. They would install two extra automated packing lines, but they do not know whether premium demand will remain high for the whole year.
Define the term 'scarcity'.
Using Table 1, calculate how many standard meals Rivermoor gives up for each additional premium meal produced under Option N.
Explain two costs Rivermoor may consider before choosing Option N.
Using Table 1, analyse how choosing Option N may affect Rivermoor's consumers.
Do you think Rivermoor Meals Ltd should choose Option N rather than Option M? Use Items A and B and your own economic knowledge to justify your view.
81 exam-style questions on AQA GCSE Economics 1.1 Economic foundations, covering 1.1.1a Needs and wants, 1.1.1b The central purpose of economic activity, 1.1.1c Key economic decisions, 1.1.1d The main economic groups, 1.1.2a The nature of an economic resource, 1.1.2b The four factors of production, 1.1.3a The basic economic problem and making choices, and 1.1.3b Opportunity cost. Each one has a worked solution and a mark scheme showing where the marks go.