Economics 2.2- Opportunity Cost, Trade-Offs, and Choices.

Cost is always a forgone

opportunity

Opportunity cost refers to

the value of the​ next-best alternative.

A production possibilities curve

A. defines the maximum quantity of one good or service that can be​ produced, given that a specific quantity of another is produced. B. shows the possibilities available for increasing the output of one good or service by reducing the amount of another. C. represents all possible combinations of maximum outputs that could be​ produced, assuming a fixed amount of productive resources of a given quality.

Which of the following would least likely​ be, for the typical​ student, the opportunity cost of attending a class at​ 11:00 a.m.?

Partying with a close circle of friends.

Engaging in any activity using any​ resource, even​ time, involves trading off the use of that resource for one or more alternative uses.

True

Every choice involves giving up an opportunity to produce or consume something else.

True

With respect to your grades in your accounting and economics​ classes, a​ one-to-one trade-off means that the opportunity cost of receiving one grade higher in accounting​ (for example, improving from a D to a​ C) is one grade lower in economics​ (falling from a B to a​ C).

True

A production possibilities curve represents

all possible combinations of output that could be produced assuming fixed productive resources and their efficient use.

The opportunity cost of attending a class at​ 11:00 a.m. will likely differ from the opportunity cost of attending a class at​ 8:00 a.m. because

a​ student's evaluation of any given set of alternatives is likely to be​ time-sensitive the number and variety of alternatives at 11 a.m. are likely to differ from those available at 8 a.m.

You and a friend decide to spend​ $100 each on concert tickets. Each of you alternatively could have spent the​ $100 to purchase a​ textbook, a meal at a highly rated local​ restaurant, or several internet movie downloads. As you are on the way to the​ concert, your friend tells you that if she had not bought the concert​ ticket, she would have opted for a restaurant​ meal, and you reply that you otherwise would have downloaded several movies. The relevant opportunity costs for you and your friend of the concert tickets that you purchased are

internet movie downloads for you and a meal at a highly rated local restaurant for your friend.

Opportunity cost

is the value of the next best alternative as a result of choosing some given alternative

another way to look at opportunity cost is the trade-off that occurs when one activity is undertaken rather than the _______ alternative activity.

next-best

Scarcity requires us to choose. Whenever we choose, we lose the __________ -valued alternative.

next-highest

A ____________ curve graphically shows the​ trade-off that occurs when more of one output is obtained at the sacrifice of another. This curve is a graphical representation​ of, among other​ things, opportunity cost.

production possibilities

Opportunity cost is best defined as ________ alternative that must be sacrificed to obtain something or to satisfy a want.

the next best