Opportunity Cost

What is opportunity cost?

• your choice
• what you give up to make a choice

What is scarcity? 

• Having too many resources 
• Not  having enough resources 

A popular bakery has only a few ingredients left to make their products. The bakers decide to make cookies for their customers instead of muffins. What is their opportunity cost?

• muffins

• cookies

The Welch family has saved some money. They can spend it on a vacation or build a swimming pool in their back yard. They decide to spend the money on a swimming pool. What is the opportunity cost of their decision?

• vacation

• swimming pool

Emelia has been invited to a sleep over, but she has tickets to a football game the same night. She decides to give the tickets away and go to the sleepover. What is the opportunity cost of her decision?

• going to the football

• spending time at a friends house

Max is studying for a test, but his favorite TV program is on. If he studies for the test, he will miss watching the show. Max decides to study for his test instead of watching TV. What is the opportunity cost of his decision?

• studying for a test

• watching TV

The local council must decide what to do with the money they have. They could build a new skate park or they could buy more computers for the library. The officials decide to build a skate park. What is the opportunity cost of their decision?

• new skate park

• more computers

The economic problem is that

• resources are limited and wants are limited.

• resources are unlimited and wants are limited.

• resources are limited and wants are unlimited.

• resources are unlimited and wants are unlimited.

Economics is the study of how

• gov't allocates scare resources to satisfy people's unlimited wants.
• gov't supplies money to businesses to produce goods & services.
• people use their scarce resources to satisfy their unlimited wants.
• businesses supply unlimited goods & services with limited resources.

Identify the factor of production. 

• land
• labor
• capital
• entrepreneurship