1.3 opportunity cost

Question 1

what is opportunity cost?

Answer 1

the value of the next best alternative forgone.

Question 2

what is a PPC?

Answer 2

they depict the maximum productive potential of an economy, using a combination of two goods or services, when resources are fully and efficiently employed.

Question 3

what do each points on a PPC show?

Answer 3

inside- inefficent, there is spare capacity in an economy
on the ppc- the most efficient. all fops are being used.
outside- unattainable with current resources.
shift out- economic growth in the long run

Question 4

what are the evaluating arguments of the usefulness of opportunity cost?

Answer 4

• not easy to quantify and compare as they may have different benefits
  *hard to place a monetary value
  *based on future events
  *always exist because of scarce resources so are often overlooked