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