LS3 - Opportunity Cost

Question 1

Opportunity Cost

Answer 1

The opportunity cost of a decision is the value of the next best alternative forgone, when making a decision

Question 2

How Do Consumers Use Opportunity Cost

Answer 2

To decide what to spend their incomes on

Question 3

How Do Producers Use Opportunity Cost

Answer 3

To decide what and how to produce goods and services.

Question 4

How Do Governments Use Opportunity Cost

Answer 4

To decide what policies to use.

Question 5

Production Possibility Frontier (PPF)

Answer 5

Shows the maximum potential output of a combination of 2 goods/services an economy can achieve when all of its resources are fully employed.

Question 6

Causes Of Economic Growth

Answer 6

Increase in quality and quantity of FOP.

Outward shift in PPF

Question 7

Economic Growth

Answer 7

The increase in the production of goods and services in an economy.

Question 8

Capital Goods

Answer 8

Goods that produce goods and services.

Question 9

Consumer Goods

Answer 9

Goods that satisfy consumer needs and wants.

Question 10

What Does It Mean If An Economy Is Below Its PPF

Answer 10

There’s inefficient use/underutilisation of resources.

Question 11

What Does It Mean If An Economy Is On The PPF?

Answer 11

All resources have been efficiently allocated.