Oppertunity Cost Flashcards
1
Q
Define Oppertunity Cost
A
- Is the next best alternative foregone
2
Q
What is the oppertunity cost of moving from point A to B?
A
Oppertunity Cost is that the output goods have fallen by 4 (22 to 18)
3
Q
What is the oppertunity cost if we want to move point D onto the PPF curve?
A
The economy is inefficient, and we can increase both goods and services WITH NO Oppertunity Cost
4
Q
Is point C even possible?
A
Point C isnt possible.
5
Q
Give 2 examples of oppertunity cost.
A
- Cost of war, spedning money on war is monet they could of spent on healthcare, education etc…
- Spending on new roads, the money spent on developing the roads could be spent again on education, healthcare etc…
6
Q
What does the theory of Comparitive Advantage state?
A
- That countries should specialise in producing goodsa were they have a lower opperunity cost.
7
Q
What is a free good?
A
A good which has no opperunity cost, when consumed.
8
Q
Is there an oppertunity cost when consuming a good?
A
NO! We call these goods free goods, eg, when you breathe in air it doesnt reduce the amount of air others can breathe in.
