3: Opportunity Cost

Question 1

What is opportunity cost

Answer 1

The next best alternative that is sacrificed in order to satisfy the other

(the loss of other alternatives when one alternative is chosen.)

Question 2

How is opportunity cost important for consumers

Answer 2

It helps us decide what is the best good for us to buy

Question 3

How is opportunity cost important for workers

Answer 3

It helps them decide what is the best job for them to apply to considering how much it satifies them, wages paid and chances of promotion

Question 4

How is opportunity cost important for producers

Answer 4

It helps them decide what is the best product to make, considering consumer demand and cost for producing using resources available or public firms and for private firms, how much profit it will generate

Question 5

How is opportunity cost important for government

Answer 5

It helps them decide what is the best place for them to use money for

Question 6

What is the difference between economic and free goods

Answer 6

Economic goods require goods to produce, therefore have an opportunity cost. Free goods are available naturally therefore don’t have an opportunity cost