A manufacturer can use a vacant workshop for only one activity during the next year. Its estimates are shown in the table.
| Activity | Expected profit during the year |
|---|---|
| Produce repair kits | £96,000 |
| Produce storage units | £84,000 |
| Lease the workshop to another business | £70,000 |
The manufacturer initially chooses to produce repair kits. Before production begins, the expected profit from producing storage units is revised to £101,000. The other estimates do not change.
State the opportunity cost of the manufacturer's initial choice to produce repair kits.
Explain how the revised estimate affects the opportunity cost of continuing to produce repair kits and whether the manufacturer should continue with this choice.
77 exam-style questions on OCR GCSE Economics 1.2 The basic economic problem, covering 1.2.1 Scarce resources and unlimited wants, 1.2.2 The economic problem, 1.2.3 Opportunity cost, and 1.2.4 Costs and benefits of economic choices. Each one has a worked solution and a mark scheme showing where the marks go.