Understanding Opportunity Cost

What is opportunity cost?

• The cost of the next best alternative foregone.

• The price of an item in the market.

• The total amount of money spent.

• The financial gain from an investment.

Which of the following is an example of considering opportunity cost?

• Ignoring long-term benefits for immediate satisfaction.

• Choosing to invest in new technology rather than dividends.

• Buying the cheapest item available.

• Focusing solely on monetary gains.

Opportunity cost is directly related to which economic principle?

• Market equilibrium

• Supply and demand

• Consumer behavior

• Scarcity

What does not always involve money according to the concept of opportunity cost?

• Investment returns

• Selling assets

• Decision-making

• Purchasing products

How can opportunity costs help in decision-making?

• By simplifying complex data

• By guaranteeing financial returns

• By eliminating all risks

• By showing the total price tab of decisions

What is a non-financial example of opportunity cost mentioned in the text?

• Comparing insurance policies

• Choosing between watching TV or cleaning the house

• Deciding between two job offers

• Selecting a stock investment

What should you consider when thinking about opportunity costs?

• Only the financial aspects

• Both short- and long-term perspectives

• Only the opinions of experts

• Only the immediate benefits

According to the text, what phenomenon affects decision-making as more choices are faced?

• Anchoring effect

• Confirmation bias

• Cognitive dissonance

• Decision fatigue

What unusual fact about judges' decisions is mentioned in relation to decision fatigue?

• Judges are quicker in their decision-making on Fridays

• Judges grant parole more often in the morning

• Judges prefer to not make decisions after lunch

• Judges are less likely to grant parole on Mondays

What is emphasized about opportunity costs in financial decisions?

• They solely focus on immediate costs

• They predict the exact future value of investments

• They reduce the need for financial planning

• They provide more information about choices