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.  They could bake muffins or cookies, but they can’t make both.  The bakers decide to make cookies for their customers.  What is the opportunity cost of their decision?

• muffins 
• cookies 

The Welch family has saved some money.  They can spend it on a vacation to the Grand Canyon 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 

The local government for a community must decide what to do with the sales tax collected.  They could build a new skate park or they could buy more computers for the public library.  The officials decide to build a skate park.  What is the opportunity cost of their decision?

• new skate park
• more computers 

The opportunity cost of a good is

• its price in dollars and cents.

• the alternative goods forgone.

• the price of alternative goods foregone.

• none of the other options

A firm operating at 'X' produces 70 whips and 60 saddles. It changes production to 'Y' producing 20 whips and 90 saddles. The opportunity cost of this production change is

• 20 whips

• 30 saddles

• 50 whips

• 60 saddles

Which one of these definitions best describe Opportunity Costs?

• The cost of making one decision over another.

• The cost for the opportunity to buy anything you want.

• The opportunity that will cost you loads of money.

Tom was shopping for a car. He has looked at a Ford, Honda, Toyota, and Dodge. After a lot of debate, he narrowed it down to either the Ford or the Honda. He selected the Ford, because he liked the interior a little better. What was his opportunity cost?

• Ford

• Honda

• Toyota

• Dodge

What is opportunity cost?

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