Basic Economic Terms

Branch of economics that studies the decisions made by businesses and households.

• microeconomics

• macroeconomics

• international economics

• development economics

Opportunity cost is

• the monetary cost of a product

• the value of the best alternative foregone in making choice

• the benefit derived from a product

• the value of everything given up when making choice

You can either spend $5 on a coffee or a latte. You choose the coffee. The opportunity cost is:

• $5

• the latte

• $5 and the latte

• impossible to determine

To save money, you go online to purchase a movie ticket for $10. Before you leave for the movie, a friend invites you to the local pizza place where they have $5 special for two pieces of pizza and a soda. If you decide to go to the pizza place instead of the movie, what is your opportunity cost?

• The $5 meal plus the $10 ticket

• The $5 meal plus the $10 plus the value of your time spent at dinner

• The $5 meal plus the value of your time spent at dinner

• The $10 ticket plus the value of your time spent at dinner

For an economist, the cost of something is:

• the amount of money you paid for it

• what you gave up to get it

• always equal to its market value

• the quantity of resources used to produce it

Kahli is offered a free ticket to the opera. His opportunity cost of going to the opera is:

• zero-the ticket is free

• price listed on the ticket

• what Kahli would do if he had not gone to the opera

• ticket price plus what Kahli would do if he had not gone to the opera

You have $1 to spend on a snack, chips and candy will cost you $1 each. You choose the chips; the opportunity cost is:

• $1 and the enjoyment you would have received from the candy

• $1

• $2 minus the enjoyment you would have received from candy

• the enjoyment you would have received from the candy bar