1.3-Opportunity Cost Flashcards
What is the definition of opportunity cost?
Opportunity cost is the value of the next best alternative that is forgone when making a decision.
True or False: Opportunity cost only considers monetary costs.
False
Fill in the blank: Opportunity cost is a key concept in _____ economics.
micro
Which of the following is an example of opportunity cost? A) The price of a car B) The time spent studying instead of working C) The interest earned on savings
B) The time spent studying instead of working
What does the term ‘trade-off’ refer to in economics?
A trade-off refers to the alternatives that must be given up when making a choice.
True or False: Opportunity cost is only relevant for financial decisions.
False
What role does opportunity cost play in decision-making?
Opportunity cost helps individuals and businesses evaluate the potential benefits of different choices.
Short Answer: How can opportunity cost affect consumer behavior?
Opportunity cost can influence consumer choices by highlighting the potential benefits of alternatives.
Fill in the blank: The concept of opportunity cost is crucial for understanding _____ and _____ in economics.
choice, scarcity
What is the opportunity cost of attending college?
The opportunity cost includes lost income from working during that time and the costs of tuition and fees.
Multiple Choice: Which situation illustrates opportunity cost? A) Buying a new phone B) Choosing between two job offers C) Spending money on a vacation
B) Choosing between two job offers
True or False: All decisions have opportunity costs.
True
What is a common misconception about opportunity cost?
A common misconception is that opportunity cost only refers to monetary loss.
Fill in the blank: In economics, the opportunity cost of a choice is associated with _____ alternatives.
forgone
What is the relationship between opportunity cost and scarcity?
Scarcity forces individuals to make choices, leading to opportunity costs as they forgo alternatives.
Short Answer: Why is it important to consider opportunity cost in business decisions?
Considering opportunity cost helps businesses maximize their resources and make more informed decisions.
Which of the following best describes implicit costs? A) Direct expenses B) Opportunity costs associated with foregone alternatives C) Fixed costs
B) Opportunity costs associated with foregone alternatives
True or False: Opportunity cost can change over time.
True
What is an explicit cost?
An explicit cost is a direct payment made in the course of running a business.
Fill in the blank: Opportunity cost can influence _____ and _____ decisions.
personal, economic
Multiple Choice: If you spend time studying instead of working, what is the opportunity cost? A) The cost of books B) Potential earnings from working C) The knowledge gained from studying
B) Potential earnings from working
Short Answer: How does understanding opportunity cost benefit consumers?
It helps consumers make more informed choices by weighing the benefits of alternatives.
What is the difference between accounting profit and economic profit?
Accounting profit does not consider opportunity costs, while economic profit does.
True or False: Opportunity costs are always easy to quantify.
False
