Opporutnity Cost and the PPF

What is opportunity cost?

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

Emelia has been invited to a sleep over at Chloe’s house for this Saturday.  Emelia has tickets to see her favorite band in concert that same night.  She decides to give the tickets to her sister and go to Chloe’s house.  What is the opportunity cost of her decision?

• seeing her favorite band 
• spending time at a friends house 

Max is studying for his spelling test.  Unfortunately, his favorite TV program is on right now.  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 

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 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.

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

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.

Scarcity arises because all societies have

• limited productive resources to satisfy unlimited wants
• unlimited productive resources to satisfy limited wants
• limited needs and unlimited wants
• unlimited needs and limited wants

The PPF shown demonstrates a(n) ____rate of opportunity cost.

• constant

• increasing

• confusing

• exponential

The PPF shown demonstrates a(n) ____rate of opportunity cost.

• constant

• increasing

• confusing

• exponential