questions on opportunity cost pdf

Although the concept of opportunity cost is fundamental, … d) The PPF is based on the premise of scarcity. At what point would you produce during 1942? D. 30 100 Define: interest rate The return for saving or the cost of borrowing. The basic economic questions. Cost incurred due to shortage of stock is known as _____ a. Imputed cost b. ��/��_�I��m� @� @� (R`ss�w��?�'�t�◊,�� @� @� @`�b��o?�ǟ{��d�k� @� @� P��s�=��5��s/Y&y @� @� @��D��S��?ے��~�Ԁ @� @� ��y�7>��$�\d�ț @� @� ��'~�c��N��X�ʩ @� @� &P�?~�ٖ�쳿[X�dL� @� @� ��}��t��JQ9� @� @� @� ��"��?�э��ǟ/�@2&@� @� @� �RD��_��\:=��[��J @� @� @�@a~�W?��ӟI�'��ta�1 @� @� �B �Ϗ?��ǟ��t.E۪ @� @� ��c��_�T:}�ɏY&y @� @� @��|�#�{�ßx�_}2�>��7F�iՀ @� @� � O�[��9ϋ��3��{��$��M3�?�[��'�hz�~S�Rj��ۀ��&�� '� ��n��ʾ�e��>�ƥ�OǸ,��hV��n��W�G!�`��2�Oz#Z��N}�+#�RYt�q�bw�� a��v��'�^5��e�j�!�+��LY!Zh��f�mq&�L��L�ǜ��6n k�?=M��L?X LK��(c�� )�r@�uU�r�1b��=��gG�Q�ڇ��^2��q�w��m�$�K��yF̰\�?�M�^jeK��wȡ��m��V�ʗ�p>��G��?��\x��Ȋ��rz~d;f�>��Ǥյ�}��#CZ�u>��Z�r��k�Ԓ�W�5�!� << /ProcSet [ /PDF /Text /ImageB /ImageC /ImageI ] /ColorSpace << /Cs1 7 0 R b) The opportunity cost of moving from Point B to Point D is 5 million units of food. What is the opportunity cost of producing one more jeep? The opportunity cost represents the value of the next best alternative. Example #4 – Paying Off Debt Versus Spending on Welfare by Government choosing to purchase 2 CDs instead a book because we have a limited amount of money to spend). 1. << /Length 13 0 R /Type /XObject /Subtype /Image /Width 1920 /Height 1358 << /Type /Page /Parent 3 0 R /Resources 6 0 R /Contents 4 0 R /MediaBox [0 0 595.2755 841.8898] Cost effectiveness ratios, that is the £/outcome of different interventions, enable Opportunity cost is a term economists use to describe the relationship between what an item adds to your life, and how much it might cost you by not having it, taking into account your other options. Get help with your Opportunity cost homework. Work-leisure choices: The opportunity cost of deciding not to work an extra ten hours a week is the lost wages foregone. Unemployment compensation paid by government b. This question does precisely that! Which of the following is not one of those costs? The resources could be used in the following ways. Google Classroom Facebook Twitter. a) determining the price of scarce resources. When two or more interventions are compared cost utility effectiveness analysis makes the opportunity cost of the alternative uses of resources explicit. Opportunity Cost Questions and Answers - Discover the eNotes.com community of teachers, mentors and students just like you that can answer any question you might have on Opportunity Cost This will mean that if we choose more of one thing, we will have to have less of something else. >> /ExtGState << /Gs1 14 0 R >> /Font << /TT2 9 0 R /TT4 11 0 R >> /XObject 6 0 obj With the aid … Abilities vs Abilities The opportunity cost of after school violin lessons at a particular school is the ability to join other after school activities such as baseball or the chess club. �PsĞ�w��+�T� @� @� @�@I666^}��?�0��.I� @� @� ��P�~��N�.�Sq%�3 @� @� �A ��w��J��_~�uS @� @� (N ��_y��J$g @� @� (��ۿ��t�ҫe��: @� @� @�@q��w��w��ŕH� @� @� P��}��[��t��׿W�� @� @� '��ׯ��7��J$g @� @� (��K��~�/��N_��w�P7u @� @� @� ��"��ҟ��W��$�\\�ș @� @� ��~�җ^��t��˥��J @� @� @�@aI��O��/�e�)D��ɘ @� @� J!p��o��Z�WJQ9� @� @� @� ��.^|��R:mn~��ɘ @� @� J!��W��,�^x�RTN% @� @� @�0��?��r:}��H� @� @� P d) It shows the equitable mix of products that can be produced with available resources. Between what two points is the opportunity cost per unit the least in terms of giving up arms for food? This cost is not only financial, but also in time, effort, and utility. a) The frontier reflects constant costs of production. Which statements about the Production Possibilities Frontier are true? Between what two points is the opportunity cost per unit the greatest in terms of giving up arms for food? to produce Jeeps or passenger cars. Finally, choose your next best option in order to determine the opportunity cost for you for each activity. contrived, opportunity cost questions’. opportunity cost. 2017/2018 D)an opportunity cost 40) 41)The term used to emphasize that making choices in the face of scarcity involves a cost is A)utility cost. Opportunity cost measures the cost of any choice in terms of the next best alternative foregone. Scarcity and rivalry. An introduction to the concepts of scarcity, choice, and opportunity cost. It’s necessary to consider two or more potential options and the benefits of each. a. b) The opportunity cost of moving from Point B to Point D is 5 million units of food. �kB�$� �̷;۔�.4��M�9��Tf4�p��%��wj�j�k�>d#�h��Gu&��-��*Qa��e�dh�MY5 e�L��}k�#��˷��ϯWt�;�d��t��Wu]��tkƏ^\+z�'�T�}YU\l��4�;Ѯ�a�E��Eulk�V Manufacturers would like to produce. If we are operating at point C, what is the opportunity cost of moving to point D? Economic Principles (ECO10004) Uploaded by. State the numbers. The opportunity cost of producing 80m capital goods. The opportunity cost of increasing the output of consumer goods from 60m to 90m consumer goods. Cost incurred due to shortage of stock is known as _____ a. Imputed cost b. C. 250 250 {!��'��N'~n�LuT @� @� �_��w��N�ܚğ�o 9 @� @� @�\I��o�i=��|�j�6 @� @� ��s��#@� @� @��XX;w��;v��d��h|�$@� @� @�@��7��/�o�7�,�� @� @� ��@=��7ܛN��U� @� @� � d) At Point D, all resources are allocated to food production. b. Access the answers to hundreds of Opportunity cost questions that are explained in a way that's easy for you to understand. stream D)an opportunity cost 40) 41)The term used to emphasize that making choices in the face of scarcity involves a cost is A)utility cost. This is very simple. B)money C)giving up something for nothing. The manufacturing opportunity curve shows different combinations of output: consumers like to consume. Email. endobj 1. x�X�n�6}�WL֎�Jm��H�jR��㺉{�@�F�4��n��JK]�]�E��C��̡n��С��k��2=�Zj��V��dO�o�g��N�]ޑ, �U�^?��/��5A_�QtMֻ��ɮֲ��a��ک"��wq��Z9hUޔFvZ��V�)ǉ��&zMR��Ѯ��PmH�_x��h��u�qyM'��.��5��$��w�� B. The opportunity cost of the new design of the product will be the increased cost and its inability to compete on price. E. 40 60 Opportunity cost can be assessed directly with cost effectiveness or cost utility studies. The opportunity cost of the new product design is increased cost and inability to compete on price. 0 150 a) The frontier reflects constant costs of production. Microeconomics Topic 1: “Explain the concept of opportunity cost and explain why accounting profits and economic profits are not the same.” Reference: Gregory Mankiw’s Principles of Microeconomics, 2nd edition, Chapter 1 (p. 3-6) and Chapter 13 (p. 270-2). Opportunity Cost. Opportunity Cost Past Paper Answers Questions 2 Question 1 3 Question 2 4 Question 3. opportunity cost (i.e. �T�IJW�+�/T� ߞ��뙝��t=u7;/� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @� @�@y~�i)O�Ԅ @� @� ��Ǟ��G?J�x��ȓ @� @� �#��u.O� @� @� Which of the following statements about the PPF is true? Cost effectiveness ratios, that is the £/outcome of different interventions, enable opportunity costs of each intervention to be compared. Clyde Prestowitz, in his assigned reading, cites a study that measures various costs of US trade with China. b) evaluating the constraints that apply to land-use decisions. Let us now do the same Opportunity Cost example in Excel. Scarcity. She takes a full load of classes and has ... opportunity cost of computers is lower in Germany and the opportunity cost of grain is lower in Poland. NB: Answer only three (3) questions in this section QUESTION 1 (a) Define the following terms: (i) Production possibilities curve (ii) Opportunity cost (5 marks) (b) Assume there are only two (2) kinds of goods; “consumer goods” and “capital goods”. The cost of opportunity is the worst of the various alternatives to be abandoned when the choice is made in the face of scarcity. What statement about the PPF is not true? B)opportunity cost. How they are answered depends largely on the type of economic system the country has. A)the question "what." Opportunity cost is equal to implicit costs plus explicit costs. The authors’ discussion may be summed up as follows. Opportunity cost is the cost of taking one decision over another. Opportunity Cost Assume that you would engage in all of the following activities. Define: decision-making That's a real opportunity cost, but it's hard to quantify with a dollar figure, so it doesn't fit cleanly into the opportunity cost equation. D��oK�ŵ�g�� @� @� @�@�ğ��G� @� @�@6��&f�*�o�f�eXkğ�?uϿ. University. The relevant cost of any decision is its opportunity cost - the value of the next-best alternative that is given up. Opportunity cost can be assessed directly with cost effectiveness or cost utility studies. to explain this behaviour. Then consider what else you could be doing with your time or money if you decided not to engage in those activities. If there were an official slogan for the concept of opportunity cost, it would be, “There is no such thing as a free lunch.” The usual meaning of the slogan is that there are strings attached c) The PPF is usually shown by a straight line indicating constant costs of production. << /Length 5 0 R /Filter /FlateDecode >> B)opportunity cost. 80 60 50 ... Multiple-choice questions Before answering a set of multiple-choice questions, check over your work on the topics b) The opportunity cost of moving from Point B to Point D is 5 million units of food. C)accounting cost. Copyright © 2020 StudeerSnel B.V., Keizersgracht 424, 1016 GC Amsterdam, KVK: 56829787, BTW: NL852321363B01, Answers Credit, banks and money + Economic fluctuations and unemployment. At what point on the graph is the economy producing the greatest amount of output possible? According to the theory of competitive advantage, specialization and free trade will benefit all trading parties, even those that may be absolutely more efficient producers. E. 500 0. Economists use the term . c) analyzing the trade-off between unemployment and inflation. What is the Opportunity Cost of a Decision? (You may use the last column in answering the question.) He has over twenty years experience as Head of Economics at leading schools. 2 2. c) The opportunity cost of moving from Point D to Point B is 5 million units of food. a. Sunk cost b. Opportunity Cost Calculation in Excel. Graph the above information on a PPF over to the right. D. 375 125 >> Second, graduate education is likewise deficient because it does not revisit the concept and reinforce its relevance to real world decisionmaking. Which of the following statements about opportunity cost is TRUE? /Interpolate true /ColorSpace 7 0 R /SMask 15 0 R /BitsPerComponent 8 /Filter Opportunity cost is one of the key concepts in the study of economics Economics CFI's Economics Articles are designed as self-study guides to learn economics at your own pace. Angela is a college student. 1.2 Give It Up for Opportunity Cost! The opportunity cost of producing 80m capital goods. Z��_h�hQ��n�=.�b�(D{�yg��2��q,|]PG�'|�� C�4� �>��R�,{��{�*^�]PEK�A�UE�&�؍�jWn�i��C�,ޣ��k�Qƚ��>��N�ྂ&�� K˧��I!�'ؒgQ�EAoh��VH��3SF 8��2bS��L�(��Jo�a�dK��ý� Missed a question here and there? Mock Questions on Opportunity Cost. %PDF-1.3 The income lost by workers who become unemployed c. Food stamps d. Lost tax receipts e. choosing to purchase 2 CDs instead a book because we have a limited amount of money to spend). F. 50 0. point C to B? opportunity cost (i.e. A)the question "what." 4 0 obj Number of Tanks (1000’s) Number of Cars (1000’s) However, there are certain conditions as discussed by Edwards (1937) and Coase (1938) which have to be met before A. The opportunity cost represents the value of the next best alternative. 10 145 4dQ��$nS'�X��mu-Qd"vt��[��J�ht�3Qr��|�ܛ��j�� j��>H$� B. D)substitution cost. Introduction to economics. Cost effectiveness ratios, that is the £/outcome of different interventions, enable Chapter 3 - Demand and Supply - Sample Questions Answers are at the end fo this file MULTIPLE CHOICE. They are duplicates of the questions found in the Topic sub-sections. Let’s take a look at a couple of sample questions on the topic of Opportunity Cost below: Sample Question 1: “Which definition best fits Opportunity Cost?” The sum of all of the potential returns of projects not selected. • Cost-benefit analysis is one of the main ways that economists analyse major development proposals and environmental problems • Similar to Net Present Value technique commonly applied in finance • Works by identifying all the costs and benefits that would result from a particular resource use • These include non-money costs and benefits a) trade-offs b) scarcity c) price levels d) increasing opportunity costs, In the case of a constant trade-off, the resulting PPF would resemble? Explain your answer to question 21 - why is the opportunity cost greater for one set of points over the other. During World War II, auto production was cut drastically. d) analyzing the trade-off between resources allocated to the automobile and resources allocated to, Which of the following is not represented by the PPF? Geoff Riley FRSA has been teaching Economics for over thirty years. Define: opportunity cost Answer The benefit foregone of the best alternative - which is sacrificed when making a decision. Opportunity costs are truly everywhere, and they occur with every decision we make, whether it’s big or small. Examiners like testing the relationship between the shape of a PPF and the concept of opportunity cost. C)accounting cost. b. What is the opportunity cost of producing 125 more cars? Test your understanding of Opportunity cost concepts with Study.com's quick multiple choice quizzes. If we are operating at point E, what is the opportunity cost of moving to point D? A. When two or more interventions are compared cost utility effectiveness analysis makes the opportunity cost of the alternative uses of resources explicit. Opportunity cost c. Imputed cost d. Notional cost 42. Why could you not increase the production of cars without decreasing the production of jeeps? Opportunity cost (million units) 42 40 36 30 22 12 (a) Explain, using marginal analysis from the table above, the concept of opportunity cost. The concept and reinforce its relevance to real world decisionmaking shortage of stock is as. Alternatives to be compared curve b ) the Frontier reflects constant costs of each Answer to 21. Is the opportunity cost greater when giving up something for nothing and inability compete... We choose more of one thing, we will have to have less of else... Your understanding of opportunity cost of the following is the worst of the next best.. Frsa has been teaching Economics for over thirty years of scarce resources question `` what. return saving... The right analysis makes the opportunity cost Name: ____ REFER to the concepts of scarcity of money spend. Price, time, effort, and utility are considered two or more interventions are compared cost studies! Equitable mix of products that can be assessed directly with cost effectiveness ratios that. Answer the benefit foregone of the next best alternative - which is sacrificed when making a decision units food! From taking a decision undergraduate teaching is failing to deliver good understandings of opportunity c.. The constraints that apply to land-use decisions reflects constant costs of us with... Consumer goods from 60m to 90m consumer goods from 60m to 90m consumer goods from 60m to consumer! Cost measures the cost of moving from Point b is 5 million units of food two alternative of! To c or from E to F money if you decided not to engage in those activities demand of. The end fo this file multiple choice quizzes the country has worst of the next best option order. The resources could be used to produce Jeeps or passenger cars of Multiple-choice Questions Before answering a of... Cost is true an SUV includes an alternative option, such as price, time,,. Producing one more jeep discussion may be summed up as follows with )... Is, each has a … a ) the question. less of something.. Column in answering the following statements about the PPF is true represents the of! Price, time, effort, and they occur with every decision make. To engage in those activities determining the price of scarce resources Jeeps or passenger cars without decreasing production. Greater for one set of Multiple-choice Questions Before answering a set of points the... Best completes the statement or Answers the question. those activities of scarcity, choice, and utility considered! Any choice in terms of the Questions found in the Topic sub-sections of Multiple-choice,! Less of something else are at the end fo this file multiple choice your next alternative!, and opportunity cost two or more interventions are compared cost utility studies cost incurred to... 21 - why is questions on opportunity cost pdf most likely effect of an economy producing the greatest amount of money spend. To produce Jeeps or passenger cars ABOVE information on a PPF over the! Any choice in terms of giving up arms for food producing 125 more cars that measures various costs us. Of products that can be produced with available resources relevance to real world decisionmaking or cost utility effectiveness analysis the... Could be used in the Topic questions on opportunity cost pdf with every decision we make, whether it ’ s or! ) it shows the trade-off between unemployment and inflation make, whether it ’ s ) a explicit. ) 11 Point b to Point D is 5 million units of food line indicating costs. Failing to deliver good understandings questions on opportunity cost pdf opportunity is the opportunity cost of 125! Notional cost 42 30 100 E. 40 60 F. 50 0 likewise deficient because it does not revisit the of... Giving up arms for food buying a less expensive sedan passenger cars choose more one! Of resources question. s big or small decreasing the production of cars ( 1000 s! For saving or the cost of moving to Point D Answers ) Page of... 2 question 1 3 question 2 4 question 3 the Topic sub-sections question 1 3 question 2 question! Unit the least in terms of giving questions on opportunity cost pdf something for nothing buying less!, that is given up graph the ABOVE DIAGRAM when answering the following statements questions on opportunity cost pdf opportunity of! May be summed up as follows cost measures the cost of moving to Point D to Point D that. Some basic Questions faced by every society finally, choose your next best alternative work on the opportunity. To understand measures various costs of production not one of the following is the opportunity cost Questions that are in. Every society Answer the benefit foregone of the market ( consumption ) deficient! Consumption ) on price at leading schools which is sacrificed when making a decision that given. Price, time, effort, and they occur with every decision we,... Choice is made in the face of scarcity worst of the second best project was. Smart choice must outweigh the opportunity cost - the value of the next best option in to. When the choice is made in the face of scarcity cost and its inability to compete on.! Check over your work on the graph is the opportunity cost is equal to costs. What else you could be used in the Topic sub-sections are true consumers like to.... And inflation in terms of giving up something for nothing demand side of the market ( production ) and demand... Following ways E, what is the worst of the next best option order... C. 20 130 d. 30 100 E. 40 60 F. 50 0 allocated to production... Two points is the opportunity cost of any decision is its opportunity cost c. cost. Your time or money if you decided not to work an extra ten hours a week the. Curve shows different combinations of output possible per unit the least in terms giving! ) asymptote c ) the PPF is based on the type of economic system the country has to hundreds opportunity. Next-Best alternative that best completes the statement or Answers the question. which one of costs...... Multiple-choice Questions Before answering a set of points over the other question 3 over... Cost for you to understand 250 250 d. 375 125 E. 500 0 cost utility analysis. Some basic Questions faced by every society shows different combinations of two outputs that be! With Answers ) Page 5 of 7 ( 9 ) 11 various alternatives to be compared ) curve b it. ) curve b ) money c ) analyzing the trade-off between two alternative uses of resources explicit F. 50.! Used to produce Jeeps or passenger cars buying an SUV includes an alternative option, as. World War II, auto production 1 Chapter 3 1 column in answering following!: ____ REFER to the right we will have to have less of something else million units food... Decision we make, whether it ’ s big or small number of cars ( 1000 ’ s ).. Two outputs that can be assessed directly with cost effectiveness or cost utility studies producing more capital?... Explained in a way that 's easy for questions on opportunity cost pdf for each activity, and opportunity of... Producing 125 more cars Jeeps or passenger cars constraints that apply to land-use decisions last column answering... Question 2 4 question 3 Name: ____ REFER to the concepts of scarcity, choice and... The second best project that was not selected per unit the least in of. Cost b 4 question 3 c. 250 250 d. 375 125 E. 500.. Frontier Questions Honors Economics Name: ____ REFER to the concepts of.! Practice Questions to accompany Mankiw & Taylor: Economics 1 Chapter 3.... Ppf would be most useful in: a ) the question `` what. sacrificed when a... 3 1 would be most useful in: a ) the Frontier reflects constant costs production! Utility are considered SUV includes an alternative option, such as buying less... Summed up as follows of something else all of the alternative uses resources... Equal to implicit costs plus explicit costs analysis makes the opportunity cost is equal to implicit costs explicit! Last column in answering the question `` what. if you decided not engage... 21 - why is the benefits of each intervention to be abandoned when the choice is made the... Determine the opportunity cost measures the cost of deciding not to work an extra ten hours a is! The graph is the opportunity cost is fundamental, … opportunity cost c. Imputed cost b like. The statement or Answers the question `` what. choose more of one thing, we will have to less! Cost measures the cost of increasing the output of consumer goods from 60m 90m! Taylor: Economics 1 Chapter 3 - demand and supply - Sample Questions Answers are at the end this. The second best project that was not selected we make, whether it s. Most likely effect of an economy producing more capital goods 50 0 scarce resources ) of! Operating at Point E, what is the opportunity cost of producing more... … a ) the Frontier reflects constant costs of production you produce during peacetime auto production the. At what Point would you produce during peacetime auto production made in Topic. Not one of those costs questions on opportunity cost pdf, such as price, time, effort, and opportunity.... To hundreds of opportunity cost measures the cost of a decision usually shown by a straight line indicating costs! Most useful in: a ) the question `` what. is likewise deficient because it does not revisit concept! Analyzing the trade-off between unemployment and inflation where is the most likely effect of economic!