1.2 outcomes of making a purchase

Question 1

What is the definition of opportunity cost?

Answer 1

the alternative you
have to go without in a choice between two
competing things or events

Question 2

What is cost benefit analysis?

Answer 2

• Another way of analysing and assessing
  purchasing decisions
• Benefits gained by making the purchase are
  added up, and then the costs that will be
  incurred by making that purchase need to be
  subtracted

Question 3

When purchasing a car, you need to think of?

Answer 3

• purpose of the car
• budget (how much can I afford to pay?)
• payment (savings or loan?)
• type of car (age, size and safety)
• ongoing costs (insurance, registration, petrol)

Question 4

What does comprehensive insurance cover?

Answer 4

Covers loss or damage to your car as well as accidental damage to other
people’s property.

Question 5

What does third party insurance cover?

Answer 5

Covers your legal liability for damage to other people’s property caused by a
motor vehicle accident that is your fault.