1.2 Opportunity Cost and Trade-Offs Pearson Economics

A technique of reducing or forgoing one or more desirable outcomes in exchange for increasing or obtaining other desirable outcomes in order to maximize the total return or effectiveness under given circumstances.

• Trade-off
• Opportunity cost
• PPF
• Scarcity

Which of the following best describes the relationship between trade offs and opportunity cost?

• opportunity costs happen because of trade offs
• opportunity costs are the opposite of trade offs
• trade offs lower the opportunity cost of an economic decision
• trade offs occur when there are no opportunity costs

Imagine you decide to purchase a soccer ball for $35. Which of the following is an opportunity cost of your decision?

• the time spent deciding to spend your money
• something else that could have been bought
• $35 in cash
• the time spent making the purchase and the tax paid on the bill

the cost of the next best thing (what you are giving up)

• opportunity cost
• opportunity costs are the opposite of trade offs
• trade offs

a choice between two things that cannot be had at the same time

• opportunity cost
• opportunity costs are the opposite of trade offs
• trade offs

A country is responsible for producing guns for military defense and school lunches for students who can't afford it ("butter"). The opportunity cost of producing more guns is.. 

• decrease in the # of lunches divided by the increase in the # of guns
• increase in the # of guns divided by the decrease in the # of lunches
• decrease in the # of guns divided by the increase in the # of lunches
• increase in the # of lunches divided by the decrease in the # of guns

Economic decision to use one more additional unit of a resource

• Thinking at the Margin
• Factors of Production
• Opportunity Cost
• Guns or Butter

Additional cost associated by producing one additional unit of product.

• Fixed Costs
• Average Costs
• Marginal Costs
• Emplicit Costs

a comparison of the marginal costs and marginal benefits of a decision

• benefit-cost analysis
• marginal revenue
• opportunity cost
• trade-off

The extra benefit of adding one unit of production:

• Trade-Off
• Marginal Benefit
• Revenue
• Profit