Opportunity Cost Quiz

Opportunity cost is the value of the next best alternative that is given up when a financial decision is made. True or False?

• True

• Maybe

• False

• Not sure

What is the opportunity cost of buying a new smartphone for $500 when the next best alternative is to invest the money in stocks with an expected return of 10%?

• The opportunity cost is $250 (50% of $500)

• The opportunity cost is $50 (10% of $500)

• The opportunity cost is $100 (20% of $500)

• The opportunity cost is $25 (5% of $500)

When a company decides to invest in new machinery instead of using the funds to expand its product line, what type of opportunity cost is being considered?

• Production opportunity cost

• Management opportunity cost

• Capital opportunity cost

• Labor opportunity cost

Opportunity cost is only related to money and financial decisions. True or False?

• False

• Not sure

• True

• Partly true

If a student chooses to work part-time to earn money instead of studying for an exam, what is the opportunity cost of their decision?

• The money they could have spent on entertainment instead of working part-time

• The money they could have borrowed from a friend instead of working part-time

• The money they could have saved by not working part-time

• The money they could have earned by working part-time

Production opportunity cost refers to the cost of producing one more unit of a good or service. True or False?

• False

• Maybe

• True

• Not sure

What is the production opportunity cost of a bakery that decides to use its ovens to bake cookies instead of bread?

• Potential revenue or value from baking bread

• Cost of purchasing new ovens

• Cost of hiring additional staff

• Cost of advertising the cookies

When a country decides to allocate more resources to producing cars and fewer resources to producing bicycles, what type of opportunity cost is being considered?

• Opportunity cost

• Fixed cost

• Marginal cost

• Sunk cost

Production opportunity cost is not relevant in decision-making for businesses. True or False?

• False

• True

• Partially true

• Not sure

If a factory can produce either 100 units of Product A or 50 units of Product B with the same resources, what is the production opportunity cost of choosing to produce Product B?

• 100 units of Product B

• 300 units of Product A

• 50 units of Product A

• 200 units of Product A